Ministerial Decision of 22 September 2016 fixing the maximum reference interest rate for long-term life assurance operations

FEDERAL PUBLIC SERVICE ECONOMY,
S.M.E., MIDDLE CLASS AND ENERGY
[C - 2016/11412]
22 SEPTEMBER 2016. — Ministerial Decision fixing the maximum reference interest rate for long-term life assurance operations referred to in Article 19 of the Act of 9 July 1975 concerning the supervision of insurance undertakings

The Minister of Economy and Consumers,
Having regard to Article 216, § 1, of the Act of 13 March 2016 on the status of and supervision of insurance or reinsurance undertakings; Having regard to the proposal of the National Bank of Belgium of 31 August 2016 and received on 6 September 2016, aiming to set, with application of the criteria included in paragraphs 2 and 3 of the aforementioned
article, the maximum interest rate for life assurance contracts
at 0.75 %;
Having regard to the opinion that the FSMA transmitted on 6 July 2016 to the National Bank of Belgium and which was added to the proposal of the National Bank of 31 August 2016; Considering that the proposal of the National Bank of Belgium must be assessed against various principles, including the rules on competition; Having regard to the opinion of the Belgian Competition Authority from which it appears that the NBB may, for prudential reasons, restrict competition rules insofar as there are no other less competition-distorting measures that could achieve the same result; Considering that these other measures are in fact limited to imposing recovery measures in the event of solvency shortfalls, the outcome of which is very uncertain; Considering, furthermore, the impact that a reduction in the maximum interest rate has on supplementary pensions; Considering that, pursuant to Article 2 of the Act of 18 December 2015 on ensuring the sustainability and social character of supplementary pensions and strengthening the supplementary nature with respect to retirement pensions, Article 24 of the Act of 28 April 2003 concerning supplementary pensions and the tax system of those pensions and of certain supplementary benefits regarding social security is adapted; that the new Article 24 of this Act provides for a new calculation for determining the minimum interest rate at which the contributions provided for in the pension commitment must be capitalized; that this new regulation provides for a minimum yield guarantee of 1.75 %; Considering that in the case of supplementary pensions concluded via a group insurance with an insurance undertaking, the contributions for a large number are invested in branch 21 life insurance; that this creates a clear link between the minimum yield guarantee provided for supplementary pensions, namely 1.75 %, and the maximum interest rate provided for branch 21 life insurance; that a maximum interest rate for life assurance contracts of 0.75 % would make insurance undertakings unable to ensure a minimum yield of 1.75 % for the investment of supplementary pension contributions in a long-term life assurance; Considering also that the Council of State, in its opinion on the aforementioned Act of 18 December 2015, pointed out this problem and stated that “the range within which the minimum guaranteed interest rate must fall under the proposed scheme (between 1.75 and 3.75 %) does not correspond to the range within which the maximum interest rate must fall under the proposed prudential regulation (between 0.75 and 3.75 %); that this could lead to the situation where for the same contract the guaranteed minimum interest rate is higher than the maximum guaranteed interest rate permitted under prudential legislation.” Considering the risk that, with a maximum interest rate of 0.75 %, employers will no longer be motivated to develop for their employees a supplementary pension scheme via the system of group insurance;

FEDERAL PUBLIC SERVICE ECONOMY,
S.M.E., MIDDLE CLASS AND ENERGY
[C - 2016/11412]
22 SEPTEMBER 2016. — Ministerial Decision fixing the maximum reference interest rate for long-term life assurance operations referred to in Article 19 of the Act of 9 July 1975 concerning the supervision of insurance undertakings

The Minister of Economy and Consumers,
Having regard to Article 216, § 1, of the Act of 13 March 2016 on the status and supervision of insurance or reinsurance undertakings; Having regard to the proposal of the National Bank of Belgium of 31 August 2016 and received on 6 September 2016, aiming, in application of the criteria set out in paragraphs 2 and 3 of the said Article, to fix the maximum interest rate for life assurance contracts at 0.75 %; Having regard to the opinion transmitted by the FSMA to the National Bank of Belgium on 6 July 2016 and attached to the proposal of the National Bank of Belgium of 31 August 2016; Considering that the proposal of the National Bank of Belgium must be examined on the basis of various principles, including the rules on competition; Having regard to the opinion of the Belgian Competition Authority, from which it results that, for prudential reasons, the NBB may limit competition rules, provided that there are no other measures causing less distortion of competition and which could lead to the same result; Considering that these other measures are in fact limited to imposing recovery measures in the event of solvency deficits, the result of these measures being moreover highly uncertain; Having regard, on the other hand, to the impact that a reduction in the maximum interest rate has on supplementary pensions; Considering that, pursuant to Article 2 of the Act of 18 December 2015 aiming to guarantee the sustainability and social character of supplementary pensions and aiming to strengthen the supplementary character with respect to retirement pensions, Article 24 of the Act of 28 April 2003 concerning supplementary pensions and the tax regime of those and of certain supplementary benefits in the field of social security is adapted; that the new Article 24 of this Act provides for a new calculation to determine the minimum interest rate at which the contributions provided for in the pension commitment must be capitalized; that this new regulation provides for a minimum yield guarantee of 1.75 %; Considering that, in the case of supplementary pensions concluded via a group insurance with an insurance undertaking, the contributions are largely invested in branch 21 life insurance; that there is therefore an obvious link between the minimum yield guarantee, namely 1.75 %, and the maximum interest rate provided for branch 21 life insurance; that a maximum interest rate for life assurance contracts of 0.75 % would put insurance undertakings in the impossibility of ensuring, for the investment of supplementary pension contributions in a long-term life assurance, a minimum yield of 1.75 %; Considering that, in its opinion relating to the said Act of 18 December 2015, the Council of State highlighted this problem and raised that “the range within which the minimum guaranteed interest rate must be situated under the proposed scheme (between 1.75 and 3.75 %) does not correspond to the range within which the maximum interest rate must be situated under the
proposed prudential regulation (between 0.75 and 3.75 %), which may imply that for the same agreement, the guaranteed minimum interest rate is higher than the maximum guaranteed interest rate authorized under prudential legislation.” Having regard to the risk that, in the case of a maximum interest rate of 0.75 %, employers will no longer be motivated to elaborate for their workers a supplementary pension scheme via the system of group insurance;

BELGIAN OFFICIAL GAZETTE — 17.10.2016 — MONITEUR BELGE 70161

Considering the importance, for insurance undertakings, of being able to maintain a minimum margin between the interest rate they must offer as a minimum on supplementary pension insurance, on the one hand, and the maximum interest rate they may offer on long-term life assurance, on the other hand, Decides:
Single Article. The maximum technical interest rate for life assurance contracts referred to in Article 216, § 1, of the Act of 13 March 2016 on the status of and supervision of insurance or reinsurance undertakings, is maintained at 2 %. Brussels, 22 September 2016. K. PEETERS

Having regard to the importance, for insurance undertakings, of being able to maintain a minimum margin between the interest rate they must offer as a minimum on supplementary pension insurance, on the one hand, and the maximum interest rate they can offer on long-term life assurance, on the other hand, Decides:
Single Article. The maximum technical interest rate for life assurance contracts, referred to in Article 216, § 1, of the Act of 13 March 2016 on the status and supervision of insurance or reinsurance undertakings, is maintained at 2 %. Brussels, 22 September 2016. K. PEETERS 70162 BELGIAN OFFICIAL GAZETTE — 17.10.2016 — MONITEUR BELGE