Ministerial Decree of 20 January 2016 setting the maximum reference interest rate for long-term life assurance operations

FEDERAL PUBLIC SERVICE ECONOMY,
S.M.E., MIDDLE CLASSES AND ENERGY
*
[C - 2016/11050]
20 JANUARY 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 companies

The Minister of Economy and Consumers,
Having regard to Article 19, § 3, of the Act 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, by which 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 important 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 lead to the same result; Having regard to the argumentation of the National Bank of Belgium that the other measures it might possibly take are very limited and inefficient; that these measures are in fact 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
P.M.E., CLASSES MOYENNES ET ENERGIE
[C - 2016/11050]
20 JANUARY 2016. — Ministerial Decree fixing the reference maximum 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 companies

The Minister of Economy and Consumers,
Having regard to Article 19, § 3, of the Act 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 important 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 examined on the basis of different 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 leading to the same result; Having regard to the argumentation of the National Bank of Belgium, according to which the other measures it might possibly take are very limited and ineffective; that these measures are in fact limited to imposing remedial measures in the event of solvency deficits, the result of which is 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 Act of 18 December 2015 on guaranteeing the sustainability and social character of supplementary pensions and on strengthening the supplementary character with regard 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 in 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 company, the contributions are largely invested in branch 21 life insurance; that there is therefore a clear link between the minimum yield 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%, which the National Bank of Belgium has decided, makes insurance companies unable to ensure a minimum yield of 1.75% for the investment of supplementary pension contributions in a long-term life insurance; Considering that the Council of State also pointed out this problem in its opinion on the aforementioned Act of 18 December 2015 and states 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 group insurance system; 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 Act of 9 July 1975 concerning the supervision of insurance companies is set at 2%.
Brussels, 20 January 2016.
K. PEETERS

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 regard 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 in 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 company, the contributions are largely invested in branch 21 life insurance; that there is therefore an obvious link between the minimum yield 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 yield of 1.75%; Considering that, in its opinion on 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 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 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 1.5%, employers will no longer be motivated to elaborate for their workers a supplementary pension scheme via the group insurance system; 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 Act 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