The deadline to conclude a departure agreement is fast approaching

Back
Date:
11 May 2017

The Act of 15 May 2014 relating to various provisions modified the concept of “departure” in the Act of 28 April 2003 relating to occupational pensions and the tax regime of these pensions and of certain occupational benefits regarding social security (“AOP”) and has introduced a definition of “multi-organizer pension schemes” (“MOPS”).

In the event of a MOPS, there is no departure if the employment contract of an employee is terminated and immediately followed by an employment contract with another employer who participates in the same MOPS as the former employer. But this only applies provided that a departure agreement is concluded before 1 July 2017.

According to the AOP, departure includes among others the termination of an employment contract, other than by death or retirement. Since the Act of 15 May 2014, there is no departure if the termination of the employment contract is immediately followed by the conclusion of an employment contract with another employer who participates in the same MOPS as the former employer.

The FSMA published a circular on 5 August 2016 (Circular FSMA_2016_13), in which it describes the concept of MOPS and explains its expectations regarding the departure agreement.

In practice, there is no departure if an employee of employer X, immediately after terminating his employment contract with employer X, concludes an employment contract with employer Y, who participates in exactly the same MOPS as employer X, which is also executed by the same pension institution.

This only applies provided that there is a departure agreement which regulates the transfer of the rights and obligations between the employers.

There is no obligation to conclude a departure agreement. But in its absence, the aforementioned situation would imply a departure, with all the consequences entailed, which can have a significant impact especially on pension commitments of the “defined benefits” type. 

If you have not concluded a departure agreement, but you want to avoid a departure in situations like these, you still have a few more weeks to conclude one, since the Act of 15 May 2014 sets 1 July 2017 as the ultimate deadline to formalise the departure agreement. In this regard, it is advisable to take into account the expectations of the FSMA.

> Action point  
If you want to avoid a “departure” when an employment contract of an employee is terminated and this employee immediately thereafter enters into service with another employer who participates in the same MOPS, you have to conclude a departure agreement before 1 July 2017. This applies to both pension funds and insurance companies.