Amendment to the general and special conditions governing group insurance

Amendment to the general and special conditions governing group insurance

 

 

1. Focus on readability and transparency with new style and structure

The style and structure of the general conditions have been fully revised to improve readability for you as an employer and for the member. The conditions begin with a set of instructions to guide you through the various clauses of the contract governing an individual pension scheme. At the same time, we also transparently set out the rights and obligations for every party. In this way, your employee has a clearer idea of the benefits you are offering them.

2. Time of payment

The principal statutory amendment is the adjustment of the time of payment.

The time of payment for this supplementary pension is no longer the contractual maturity date, but the date of the member’s statutory retirement.

At the same time, the legislature stipulates that the contractual maturity date should from now on be defined as the date on which a member reaches retirement age.

This date applies for every member. The majority of people retire at 60 or 65. Retirement ages are used to calculate pension projections, such as the expected value of the policy at maturity.

Examples

Let's say that the pensionable age in the contract is 65. There are three possibilities:

1. Employee retires before the age of 65

If your employee takes early retirement (for instance at 62), membership is terminated and the accrued reserve is paid, i.e. they receive their supplementary pension before the pension age stated in the contract.

 => Pension is paid out earlier

2. Employee retires at 65

Membership is cancelled and the reserve is paid. Their supplementary pension is paid when they reach the pension age specified in the contract.

=> Pension is paid as planned

3. Employee retires after 65

Membership is extended until they reach the state retirement age (for instance 67). Please note: extension of membership is calculated at the current rate of interest and there is a new medical acceptance procedure.

=> Pension is paid later

3. Monthly premium payment at the end of the month

Why will monthly premium payments apply as from 1 January 2017?

As from 2017, KBC will ensure monthly premium payments only, in line with the monthly salary you pay your employee. This will ensure that you pay the correct premium and salary for your employee for as long as they are in your employment.

An annual premium is a premium you pay in advance. When an employee leaves your employment during the course of the year, the premium will remain fully accrued for the employee, and KBC will no longer repay a portion to you as the employer.

This means that monthly premium payments ensure that you pay the correct amounts for your employees for as long as they are in your employment.

Example

Each year, you pay every member an annual premium of 1.200 euros on the principal renewal date of 1 January.

Each year, you pay every member an annual premium of 1 200 euros on the principal renewal date of 1 January.

The premium of 1.200 euros remains the property of employee A. Repayment of half of the premium (in this case 600 euros) does not apply, as you paid it to cover the employee from 1 July to 31 December. 

How does this work if you pay monthly?

In the period from January to June, you pay 100 euros each month. As from July, you stop paying premiums for employee A. They therefore receive 600 euros for the period they were in active employment at your company, and no more.

If you notify us late of the termination of employment and have already paid the premium for July as well, we will repay you the premium for that month with the next settlement, as it will not have been accrued for the employee concerned.

Practical information:

When the new conditions have been implemented, all contracts under which premiums are currently not paid monthly will be amended to stipulate monthly payment with effect from the initial principal renewal date. If you currently pay quarterly, half-yearly or annually, as from 1 January 2017, KBC will switch to monthly payment as from the annual renewal date.

The following is an excerpt from the special conditions:


Clauses of special conditions

If the premiums are already paid monthly, the following clause will continue to apply:

*The total premium is payable in 12 instalments. The monthly due date for each instalment of the annual premium is the last calendar day of the month concerned. The due date is the date by which the premium must be deposited in the account of the insurer.

If the premium is not paid monthly, the following amendment will apply:

If the premium is paid annually: the total premium will be payable each year on the annual renewal date.

If the premium is paid half-yearly: the total premium will be payable in two equal instalments, due on X and Y.

If the premium is paid quarterly: the total premium will be payable in four equal instalments, due on X, Y, Z and A.

With effect from x/y/2017, the next annual renewal date, the total premium must be paid as follows: in 12 equal instalments. The monthly due date for each instalment of the annual premium is the last calendar day of the month concerned. The due date is the date by which the premium must be deposited in the account of the insurer. 

Payment by direct debit is not compulsory, but advisable because this salary component also needs to be paid on time. So be sure to contact KBC on time to request direct debit!

Why is the premium paid at the end of the month?

As from 2017, the premium will be payable on the last day of the month instead of on the first day of the month, in line with the salaries. This will enable to you to give timely notification of any changes that will affect the premium so that we can take them into account.

The premium is salary, and must be paid on time and in the proper manner. In order to ensure that this right is respected for the members, we will ensure that the premium is paid at the end of the month. As an employer, you will not only be given more time to notify us of changes pertaining to a member; you will be permitted to wait until you know the changes

Currently, you are required to notify us more than a month in advance in order for the premium to be adjusted. This is not always realistic.

Example

Previous situation

As an employer you pay premiums at the beginning of the month, e.g., on 1 January. However, the invoice you pay is based on the previous
Why? As an employer you always have to inform KBC of any changes in advance (in this case on 8 December). If this information changes again that month it won't be included in the invoice you receive from us.

Solution = new procedure

You pay your premium at the end of the month (31 January). If any other changes are made that month you will receive a corrected invoice before the payment deadline (on 8 January).

Practical information

  • If you pay by direct debit: the date of the direct debit will change to the second-to-last working day of the month. This is the date that will be stated on the invoice. 
  • Advance invoice and adjustment invoice: if changes occur in your staffing and you notify us and/or process them after the advance invoice has been sent, you may receive two invoices in the month concerned. In this case, you must pay the two invoices separately, as they will not be offset against one another.
  • We will make clear arrangements with each other . As an employer, you are responsible for notifying us of any changes in a timely and proper manner to enable us to send accurate invoices. It is then our responsibility to process those changes in a timely and proper manner. The ‘administrative checklist’ specifies the deadlines both we and you have to observe.

How is this laid down in the general conditions?

Clause: 3.2 Premium and due dates

Article 15

The calculation of the premium is laid down in the special conditions in the form of an annual premium.
This annual premium is calculated for every annual renewal date based on the level of cover to which each member is entitled on this date.
This annual premium is payable in 12 equal instalments. The monthly due date for each instalment of the annual premium is the last calendar day of the month concerned. The due date is the date by which the premium must be deposited in the account of the insurer. 
The premium payable for a member changes if the level of cover changes on the individual renewal date as the result of an interim recalculation. In this case, the premium payable as from the month of the individual renewal date will be adjusted accordingly
.

4. Balanced responsibilities

Focus: respecting the rights of the member

The new conditions clearly define the obligations of the employer and KBC Insurance. It is imperative that the rights of the members are respected. It is our joint responsibility as the employer and insurer to ensure that the member receives what they are contractually entitled to. This includes the calculation of the premium based on actual employment or salaries. 

What are the obligations of the employer?

As the employer, you have the employee details we need in order to provide an individual pension scheme in the proper manner. You are therefore required to notify us in a timely and proper manner of any changes in staffing (department, employment, etc.). Naturally, we want to provide you with the support you need. We have therefore summarised the main aspects of the insurance in the ‘administrative checklist’ brochure.

If you fail to meet the aforementioned obligation, you will be liable for any loss this causes and any expenses for additional work incurred by KBC.  

If you consistently obstruct the proper provision of the individual pension scheme by failing to provide the required information or providing inaccurate information, KBC will have no other option than to cancel the insurance.

Article 3

It is naturally important that the information you provide us with is accurate and comprehensive. However, it must also be provided in a timely manner and, moreover, in a manner that prevents the privacy of the parties concerned from being breached.
The policyholder is responsible for the consequences arising from any inaccurate, incomplete or incorrect information or information submitted late. The insurer is not liable for any loss arising from failure on the part of the policyholder in this regard. Any loss incurred by the insurer as a result can be recovered from the policyholder. For instance, any expenses the insurer incurs as a result can be recovered from the policyholder.

Article 35

‘The insurer has the right to terminate this agreement if the policyholder does not fulfil its  obligations.'

What are KBC’s obligations as the insurer?

It goes without saying that KBC bears an equal responsibility. We are responsible for processing the information we receive from you in a timely and proper manner. If we fail to meet our obligation, we are liable for the loss incurred.

Obviously, as a policyholder you are entitled to cancel the group insurance with KBC at any time

Article 7

The insurer will ensure that the information provided is processed in a timely and proper manner in the provision of the individual pension scheme.
As laid down in the general and special conditions and the applicable legislation, the insurer is responsible for ensuring that the policyholder, the member, the beneficiary and the applicable government bodies are provided with the information they each need in a timely and proper manner in connection with the provision of the insurance.

The insurer is responsible for the consequences arising from any inaccurate, incomplete or incorrect information or information submitted late. The policyholder is not liable for any loss arising from failure on the part of the policyholder in this regard. Any loss incurred by the policyholder, the member or the beneficiary as a result can be recovered from the insurer. 

What if you have a question that falls outside the scope of KBC’s contractual obligations?

With this contract, you can be sure of a proper, reliable service, which includes all of the standard administrative management.
If, as a client, you have a question that falls outside the scope of the standard administrative management, KBC can assist you subject to an additional fee. In such cases, KBC always provides advance notice of the additional fee so you can choose whether or not to allow us to answer your question. 

Article 21

The insurer is entitled to charge additional fees for extraordinary expenses it incurs as a result of actions by the policyholder, member or beneficiary. Such fees are charged in a reasonable and responsible manner. This means, among other things, that the party concerned is notified in advance to enable them to estimate the cost.

Example

You request an interim statement of the accrued reserves, the guaranteed minimum and any corresponding deficits for each member. KBC issues statements of this kind once a year as part of the standard management. Additional statements can be provided at a fee.

International elements

KBC Insurance has always managed group insurance in accordance with Belgian law. A member or beneficiary can incorporate international elements into the contract governing an individual pension scheme. These can include a foreign place of residence for a member or beneficiary. Additional fees for the acquisition of knowledge for the implementation of foreign legislation are for the account of the employer. This contractual clarification is also specified separately in the conditions.

Article 47

The insurance contract is executed by the insurer in accordance with the Belgian statutory provisions that apply to supplementary pensions in general, and to the contracts governing individual pension schemes specifically. In the relationship between the policyholder and the member, it may be the case that other legal systems apply either in whole or in part because of elements such as jurisdiction, employment characteristics or place of residence.

If this has direct or indirect consequences for the insurer, the policyholder is responsible for identifying where different rules apply and the rules concerned, and requesting a change in the arrangements with the insurer. The fees and pricing agreed under this group insurance policy do not take into account any consequences of the applicability of any other legal systems. In response to the scope and nature of such consequences, the insurer can decide to unilaterally amend, or even terminate, the contract.

All disputes between the parties relating to this contract fall under the jurisdiction of Belgian courts.

Developments in legislation create new obligations for KBC

  • When a contract enters into effect, we agree a fee you pay KBC for the management of your contract and corresponding obligations. We accurately calculate this fee based on our current obligations. The legislature can significantly extend the insurer’s obligations, in which case we need to adjust the fee to this new situation to ensure our operations remain financially healthy. 
  • Naturally, the fee will only be adjusted if there are very legitimate reasons. If there is only a minor change in our obligations, the fee will remain unchanged. 

Article 24

The insurer is entitled to adjust the agreed fees based on developments in the relevant statutory or regulatory provisions, such as an amendment to prudential legislation, the regulations governing supplementary pensions, insurance legislation, consumer legislation or social security regulations to which an individual pension scheme constitutes a supplement. Such adjustments can only be made for valid reasons and in a reasonable and proportional manner and as part of a general revision of the rate for the product or individual pension scheme. In such cases, the insurer notifies the policyholder of the adjustment and as from what date it will apply.

5. Retention of supplementary cover for former employee*

 *Applies only if your contract provides for supplementary death cover.

Why retention?

It is standard practice for a member to retain their death cover if they leave the company. In this way, we ensure they are better protected should the employment relationship come to an end. The retention is also in line with the statutory requirement that the member retains their pension scheme (retirement and survivor’s pension) if they leave the company.

Because some employees do not wish to take out supplementary death cover, we give them the option of cancelling this component  at any time. However, this is a one-off option, i.e. the death cover cannot be taken out again later.

Article 12 (supplementary death cover)

For a member, the period of insurance is terminated in the following situations:

1. If the member opts to terminate the period of insurance of their own volition. They can do this, for example, if they leave the employment of the employer or no longer meet the conditions of membership.

2. The member must notify the insurer of their decision by signed letter. The termination is then effected on the individual renewal date after this decision has been received. This decision is irrevocable. Once the insurer has received this decision, the member can no longer opt to be insured for ‘death cover’ under this contract.

Practical details

When their employment relationship ends, the employee receives a letter listing a variety of statutory and contractual options and specifying their impact on the final capital. The employee can then make a well-considered decision based on this information.

6. Receiving scheme a standard feature of every contract

The legislature ensures that a member can transfer their savings from an individual pension scheme with a previous employer to their new employer’s pension plan. To enable these savings to be managed individually, independently from your individual pension scheme, we provide a receiving scheme as standard.

When your employee leaves your employment, they are given the additional option to transfer their savings to the receiving scheme. Which decision an employee makes upon leaving the company will depend on their personal preferences. The interest that applies in the case of each different option can be an important factor in their decision.

The receiving scheme will from now on be made a standard feature of every contract governing an individual pension scheme contract by means of a separate clause in the general conditions. An excerpt from the general conditions is included below. The special conditions specify the applicable interest, i.e. the interest that applies for new deposits in your individual pension scheme.

Clauses of general conditions

3. Receiving scheme

Article 1

This insurance features a receiving scheme exclusively for the management of the reserves a member transfers. It is used to manage the reserves of:

·         a member who transfers their reserves from a previous employer’s pension scheme;

·         a member who, after leaving the employment of the policyholder, transfers their reserves to the receiving scheme.

Article 2

These reserves are transferred to individual accounts in the name of the member concerned.

These reserves accrue in accordance with the rules governing interest and any profit shares specified for the ‘pension cover’.

When the reserves are transferred, the interest rate and retirement age stipulated in the section on the receiving scheme at that time apply The special conditions specify the retirement age that applies for the receiving scheme. The employer can unilaterally adjust this retirement age during the course of the agreement based on the general rules governing the statutory retirement age.

The rules stipulated for the ‘pension cover’ with regard to right of transfer, payment of the member and payment to the beneficiary in the event of the member’s death also apply to the section on the receiving scheme. If the member lays down specific arrangements in an individual contract for the ‘pension cover’ (such as personal designation of beneficiaries for the death benefit), this contract will continue to apply under the section on the receiving scheme.

Article 3

If, in connection with this receiving scheme, the member is given additional options, they will be specified in the special conditions.

Clauses of special conditions

For the receiving scheme that is part of this individual pension scheme, an interest rate of X% and a retirement age equal to the first day of the month following the month in which they turned X applies when the regulations are drawn up. There are no additional options for the member in connection with the receiving scheme.

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