Transposition European Portability Directive - Modifications Act on Occupational Pensions

On 21 June 2018 the Chamber of Representatives approved the Belgian transposition of the Portability Directive. This act abolishes the use of affiliation ages or vesting periods within occupational pension schemes as of 1 January 2019.

The Act on Occupational Pensions (AOP) currently states that the pension scheme rules can provide that:

• employees are affiliated  to the pension scheme (at the latest) as of age  25;
• reserves (financed with employer contributions) vest after  (maximum) one year. Employees who leave the company before the end of the vesting period are not entitled to vested reserves (financed by the employer). Personally financed reserves are in any event vested.

The so-called Portability Directive limits the use of waiting periods and vesting periods (total combined period of maximum 3 years) and vesting ages (maximum age 21) in order to avoid that these vesting requirements prevent workers who move between EU member states from acquiring adequate pension rights.

The modifications of the AOP are stricter than the requirements imposed by the Directive and abolish the use of (any) vesting ages and (any) vesting periods as of 1 January 2019.

In order to reduce the administrative burden for pension providers, it is (unless stated otherwise in the plan rules) no longer obligatory to offer the option to transfer the vested reserves to another pension provider if the vested reserve of the scheme member does not exceed EUR 150 (index-linked amount).

If the option of a transfer is not provided, the notification procedure upon departure does not apply and the vested reserve stays at the pension provider. The scheme member will automatically become a deferred member “without modification of the pension promise”. The organiser of the pension scheme has no obligation to offer this deferred member the option for death cover (if on the other hand the death cover were to be automatically offered to all deferred scheme members this would also apply to these deferred members).

> Action point

As from 1 January 2019 all employees (who meet the eligibility conditions of the scheme) accrue vested reserves irrespective of their age and the period of affiliation to the scheme.  We recommend modifying these provisions in the pension scheme rules and to check the rules on departure.