Ministerial Decree of 20 January 2016 setting the maximum reference interest rate for long-term life assurance operations under Article 19 of the Law of 9 July 1975

FEDERAL PUBLIC SERVICE ECONOMY,
S.M.E., MIDDLE CLASSES AND ENERGY
*
[C − 2016/11050]
20 JANUARY 2016. — Ministerial Decree fixing the maximum reference interest rate for long-term life assurance operations referred to in Article 19 of the Law of 9 July 1975 concerning the supervision of insurance companies

The Minister of Economy and Consumers,
Having regard to Article 19, § 3, of the Law of 9 July 1975 concerning the supervision of insurance companies; Having regard to the decision of the National Bank of Belgium of 22 December 2015, whereby it lowered the maximum interest rate for long-term life insurance from 3.75% to 1.5%, received on 24 December 2015; Considering that the National Bank of Belgium invokes significant prudential arguments to align the maximum interest rate for long-term life insurance more closely with the market interest rate; that in this context, reference is made in particular to the new valuation rules provided for in the Solvency II Directive, according to which assets must be valued at market value; Considering that the decision of the National Bank of Belgium must be assessed against various principles, including competition rules; Having regard to the opinion of the Belgian Competition Authority, from which it appears that the NBB may, for prudential reasons, limit competition rules insofar as there are no other less competition-distorting measures that could achieve the same result; Having regard to the reasoning of the National Bank of Belgium that the other measures it might possibly take are very limited and inefficient; that these measures are de facto limited to imposing remedial measures in the event of solvency deficits, the outcome of which is very uncertain; Having regard, furthermore, to the impact that a reduction in the maximum interest rate has on supplementary pensions;

FEDERAL PUBLIC SERVICE ECONOMY,
S.M.E., MIDDLE CLASSES AND ENERGY
[C − 2016/11050]
20 JANUARY 2016. — Ministerial Decree setting the maximum reference interest rate for long-term life assurance operations referred to in Article 19 of the Law of 9 July 1975 concerning the supervision of insurance companies

The Minister of Economy and Consumers,
Having regard to Article 19, § 3, of the Law of 9 July 1975 concerning the supervision of insurance companies; Having regard to the decision of the National Bank of Belgium of 22 December 2015, lowering the maximum interest rate for long-term life insurance from 3.75% to 1.5%, received on 24 December 2015; Considering that the National Bank of Belgium invokes significant prudential arguments to align the maximum interest rate for long-term life insurance more closely with the market interest rate; that in this context, it refers in particular to the new valuation rules provided for in the Solvency II Directive, according to which assets must be valued at market value; Considering that the decision of the National Bank of Belgium must be examined on the basis of various principles, including competition rules; 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; Having regard to the reasoning of the National Bank of Belgium, according to which the other measures it might possibly take are very limited and inefficient; that these measures are de facto limited to imposing remedial measures in the event of solvency deficits, the result of these measures being moreover very uncertain; Having regard, on the other hand, to the impact that a reduction in the maximum interest rate has on supplementary pensions;

7800 BELGIAN OFFICIAL GAZETTE — 03.02.2016 — MONITEUR BELGE

Considering that, pursuant to Article 2 of the Law of 18 December 2015 on safeguarding the sustainability and social character of supplementary pensions and on strengthening the supplementary character with regard to retirement pensions, Article 24 of the Law of 28 April 2003 concerning supplementary pensions and the tax system of those pensions and of certain supplementary benefits in social security is adapted; that the new Article 24 of this Law 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 return guarantee of 1.75%; Considering that, for supplementary pensions concluded via a group insurance with an insurance company, the contributions for a large number are invested in branch 21 life insurance; that this creates a clear link between the minimum return guarantee provided for supplementary pensions, in this case 1.75%, and the maximum interest rate provided for branch 21 life insurance; that a maximum interest rate for long-term life assurance operations of 1.5%, to which the National Bank of Belgium has decided, places insurance companies in the impossibility of ensuring a minimum return of 1.75% for the investment of supplementary pension contributions in a long-term life insurance; Considering that the Council of State also, in its opinion on the aforementioned Law of 18 December 2015, pointed out this problem and stated that “the range within which the minimum guaranteed interest rate must be located under the proposed scheme (between 1.75 and 3.75%) does not correspond to the range within which the maximum interest rate must be located under the proposed prudential regulation (between 0.75 and 3.75%); that this may lead to the guaranteed minimum interest rate being higher than the maximum guaranteed interest rate permitted under prudential legislation for the same contract.”; Having regard to the risk that, with a maximum interest rate of 1.5%, employers will no longer be motivated to develop a supplementary pension scheme for their employees via the system of group insurance; Having regard to the importance, for insurance companies, of being able to maintain a minimum margin between the interest rate they must offer on supplementary pension insurance, on the one hand, and the maximum interest rate they may offer on long-term life insurance, on the other hand, Decides:

Single Article. The maximum reference interest rate for long-term life assurance operations referred to in Article 19 of the Law of 9 July 1975 concerning the supervision of insurance companies, is brought to 2%.

Brussels, 20 January 2016.
K. PEETERS

Considering that, pursuant to Article 2 of the Law of 18 December 2015 aiming to guarantee the sustainability and social character of supplementary pensions and aiming to reinforce the supplementary character with regard to retirement pensions, Article 24 of the Law of 28 April 2003 concerning supplementary pensions and the tax regime of those and certain supplementary benefits in social security is adapted; that the new Article 24 of this Law 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 return guarantee of 1.75%; Considering that, in the case of supplementary pensions concluded via a group insurance with an insurance company, the contributions are largely invested in branch 21 life insurance; that there is therefore an obvious link between the minimum return guarantee, in this case 1.75%, and the maximum interest rate provided for branch 21 life insurance; that a maximum interest rate for long-term life assurance operations of 1.5%, which the National Bank of Belgium has decided to impose, puts insurance companies in the impossibility of ensuring, for the investment of supplementary pension contributions in a long-term life insurance, a minimum return of 1.75%; Considering that, in its opinion relating to said Law 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 located under the proposed scheme (between 1.75 and 3.75%) does not correspond to the range within which the maximum interest rate must be located under the proposed prudential regulation (between 0.75 and 3.75%), which may imply that for the same agreement, the minimum guaranteed 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 1.5%, employers will no longer be motivated to develop for their workers a supplementary pension scheme via the system of group insurance; Having regard to the importance, for insurance companies, of being able to preserve a minimum margin between the interest rate they must propose at minimum on supplementary pension insurance, on the one hand, and the maximum interest rate they can propose on long-term life insurance, on the other hand, Decrees:

Single Article. The maximum reference interest rate for long-term life assurance operations, referred to in Article 19 of the Law of 9 July 1975 concerning the supervision of insurance companies, is raised to 2%.

Brussels, 20 January 2016.
K. PEETERS

BELGIAN OFFICIAL GAZETTE — 03.02.2016 — MONITEUR BELGE 7801