Death coverage for the deferred pension plan members? Obligatory as from 1 January 2016!

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Pensions
Date:
09 Dec 2015

On 8 December 2015 a bill on occupational pensions was submitted to the Chamber of Representatives.

According to said bill a plan sponsor has to offer deferred plan members the possibility to opt for a minimum death coverage.

This possibility must be offered to plan members who leave the pension plan as from 1 January 2016.

The bill transposes the agreement that was reached within the so-called “Group of 10” (social partners) to offer a plan member, in the event of departure, the possibility to benefit from a basic death coverage without any transfer of pension reserves and any other alteration of the pension promise other than to provide the death coverage.

The amount of the death coverage will equate the vested reserves, as recalculated to take into account the cost of this death coverage. Hence, the plan member will finance the death coverage himself, but at a price that is more favourable than the normal individual price to be paid for such a coverage on the market.

Given the fact that said death coverage is optional, the plan member can decide whether or not to opt for it. When the plan member leaves the plan he will be informed of this option at the same time he receives information about his other options. He then has 30 days to communicate his decision. If this 30 day period passes without any choice being made, it can be assumed that the plan member did not opt for the death coverage. However, the deferred plan member may still opt for a death coverage during an additional period of 11 months, following the first period of thirty days.

According to the bill, the obligation to offer the death coverage is  applicable to plan members leaving the plan as from 1 January  2016. The formal modification of the pension plan rules has to be completed  by 31 December 2018.

The bill also contains a number of other important changes in the field of occupational pensions. A newsletter will follow in the coming weeks to inform you more in detail about all other changes.

> Action point

Even though the plan sponsor has until 31 December 2018 to formally modify its pension plan rules, as from 1 January 2016 the plan sponsor has to be ready to offer a death coverage to the deferred plan members.