Commission for Occupational Pensions: Advice on practical questions in connection with the amendment of the Occupational Pensions Act

Spotlight
15 September 2016

In its advice no. 38, the Commission for Occupational Pensions has addressed several practical questions concerning the modification of the Occupational Pensions Act of 28 April 2003 by the Act of 18 December 2015.

The Act of 18 December 2015 to ensure the sustainability and social nature of occupational pensions and to strengthen the supplementary nature of occupational pensions has introduced several amendments to the Act of 28 April 2003 concerning occupational pensions (the "Occupational Pensions Act"). In March 2016, we discussed the main features of the most important modifications with regard to the guaranteed return, the pensionable age and the payment of benefits, and the possibility of death coverage in case of exit (see Eubelius Spotlights March 2016).

The amendments to the Occupational Pension Act give rise to several practical questions. The Commission for Occupational Pensions has created a working group to answer practical questions from the sector. Advice no. 38 of the Commission for Occupational Pensions dated 15 July 2016 contains the report of the working group, which mentions the point of view of the different delegations within the Commission (which is composed of representatives of retirees, employees, pension institutions, employers and experts). The advice is not legally binding; courts and tribunals retain their sovereignty in the case of disputes.

The advice contains technical answers to questions regarding the following matters, among others:

  • the introduction of the possibility of death coverage in case of exit without any other modification of the pension promises;
  • the revision of the guaranteed return; 
  • the strengthening of the supplementary nature of occupational pensions;
  • the concept of "retirement";
  • the moment as from which benefits can be paid;
  • the pensionable age;
  • the activity performed by a retiree; and
  • mechanisms for anticipated exit.

The majority of the provisions of the Act of 18 December 2015 entered into force on 1 January 2016 and apply to all pension engagements from that date onwards, bearing in mind that several transitional measures are included for existing pension schemes. With regard to pension agreements and pension plan rules which have to be modified under the Act of 18 December 2015, the Act determines that the formal adjustment of these documents must take place at the latest on 31 December 2018. The advice of the Commission for Occupational Pensions is clear, however: provisions included in these agreements and rules which do not comply with the Act of 18 December 2015 cannot remain applicable until 31 December 2018. Until these documents are formally adjusted, the Act of 18 December 2015 prevails with regard to affiliated people whose pension benefits have not been paid before the entry into force of this Act.

It is thus strongly advised that existing (individual) pension agreements and (collective) pension plan rules should be screened in the light of the Act of 18 December 2015 to ascertain the impact of the Act on the concrete pension engagement with a view to its correct application. Subsequently, the pension agreements and pension plan rules must be formally adjusted – if appropriate, in cooperation with the pension institution which performs the pension engagements. Eubelius has also submitted several specific questions to the FSMA regarding certain unclear issues which clients are confronted with in adapting their pension plan rules in connection with the amendments to the Occupational Pensions Act. We will undoubtedly return to this topic.