Since 1 January 2019, the Law of 27 June 2018 scraps the application of a minimum affiliation age and a qualification period for supplementary pension schemes.
The Supplementary Pensions Act (WAP) continued to allow a delay in affiliation to a supplementary pension scheme (either life cover or death cover) for employees until at least the age of 25 (this is the so-called ‘qualification period’) to apply until 31 December 2018. In addition, the legislation allowed reserves financed by the employer to be acquired only after a period of maximum one year, unless the pension scheme rules provided otherwise and defined more rapid acquisition. This is the so-called ‘threshold period’. Please note that personally financed reserves are always acquired immediately.
At a European level, a directive was introduced (Directive 2014/50/EU) to restrict the use of qualification and threshold periods, because these periods often had a negative effect on the free movement of employees within the European Union, specifically on the level of building up a supplementary pension.
The Belgian legislator transposed the European directive into Belgian legislation, but in their Law of 27 June 2018 went much further than what the directive required of member states. The consequence of this legislation is that from now on, all employees who meet the affiliation requirements for the pension scheme must be added as members immediately. In addition, reserves financed by the employer are acquired immediately, even if you leave the company within the first year.
Waiting periods may no longer be applied, and employees must be added to schemes immediately. Any form of affiliation age included in a pension scheme’s rules can no longer apply. Example: If your rules define a minimum affiliation age of 25, any employee who is only 23 years old on 1 January 2019 must be made a member immediately. You may also no longer apply a minimum affiliation age for new employees.
Scrapping the threshold period will also have an impact that should not be underestimated. Given that the reserves will from now on be acquired immediately, there will be an increase in the number of deferred members* who are entitled to very small reserves if they leave the company soon after joining it. This increases the administrative load, because these small reserves also need ongoing management.
The law states that for the very smallest reserves of EUR 150 or less (an amount that will be indexed), those affiliated do not need to be given the option when they leave of transferring their reserves to another pension institute. It is permitted, however, to include this transfer option in the pension scheme. If this option is not provided, the notification procedure does not have to be followed upon departure and the acquired reserves remain with the pension institute. The affiliated member then automatically becomes a deferred member* ‘with no changes to the pension commitment’. In this case, the pension fund organiser is also not required to offer a choice for death cover.
*Deferred members are persons who are no longer employed within the company or the business sector, but who, at the time they left the company or sector, have kept their pension reserves in the pension scheme, so no transfer of reserves was done.