State Ordinance on Company Pension Funds (SOCPF)

AB 1998 no. GT 17 CENTRAL LEGISLATION REGISTER January 11, 2017 * ==================================================================== Title: State Ordinance on Company Pension Funds Citation title: State Ordinance on Company Pension Funds Reference: AB 1998 no. GT 17 Amendments: AB 2001 no. 91, AB 2011 no. 86; AB 2012 no. 54 (effective in AB 2013 no. 15); AB 2014 no. 11 (effective in AB 2014 no. 12); AB 2014 58; AB 2016 no. 53 (effective in AB 2016 no. 62) ==================================================================== Artikel 1

1. In this State Ordinance, the following terms are understood as:
   Minister: the Minister responsible for labor affairs; pension: both old-age, disability, widows', and orphans' pensions; company pension fund: a fund linked to an enterprise established in Aruba, in which funds are collected for the benefit of persons connected to that Aruba-based enterprise, aimed at securing pensions; employer: an employer as referred to in the State Ordinance on General Pensions; employee: an employee as referred to in the State Ordinance on General Pensions; participant: anyone for whom funds are collected in a company pension fund; contribution: any sum of money due under the name of contribution, premium, investment, subscription, purchase price, or, if payments are agreed in installments, repayment, or under any other name, paid as a lump sum or periodically, intended for securing pensions; Bank: the Central Bank of Aruba; Court: the Court of First Instance of Aruba; Business sector: the internationally used classification of economic activities employed by the Central Bureau for Statistics in its surveys; accountant: an accountant as referred to in Article 1 of the State Ordinance on Supervision of the Insurance Sector; coverage ratio: the proportion between the value of investments and the value of provided pension obligations.
2. For the application of this State Ordinance:
   a. any institution, regardless of its nature, is treated as an enterprise; b. a self-employed professional, such as a lawyer, notary, accountant, or actuary, is deemed to operate one enterprise.
3. A company pension fund may be linked to multiple enterprises, provided the Bank has established that these enterprises meet one of the following conditions:
   a. they form part of an economic unit, or b. they operate in the same business sector.
   This subsection does not apply to company pension funds linked to multiple enterprises if that linkage already existed on December 31, 2011.
4. This State Ordinance does not apply to:
   a. funds for which other rules have been established by state ordinance; b. pension insurance agreements that the employer has directly concluded with an insurer holding a license as referred to in Article 5, first subsection, of the State Ordinance on Supervision of the Insurance Sector;
   c. funds established solely to collect funds intended for securing pensions for one or more persons who manage an enterprise and hold shares in that enterprise.
5. If the enterprise to which a pension fund is linked ceases to exist, that fund is deemed not to automatically lose its character as a company pension fund for the purposes of this State Ordinance.
6. Supervision over company pension funds, as derived from this State Ordinance, rests with the Bank.

Artikel 2

1. The employer, in executing commitments regarding pensions linked to its company pension fund, ensures that the fund receives the agreed contributions, taking into account Article 10 of the State Ordinance on General Pensions.
2. Without prejudice to Article 5 of the State Ordinance on General Pensions, an employer that has reserved the right to reduce or terminate its contribution to the pension scheme communicates this reservation in writing to the fund's board. This reservation may only be made in case of a significant change of circumstances.

Artikel 2a

1. Only an Aruba-based legal entity may operate as a company pension fund; it must have at least 100 participants both upon establishment and subsequently. A company pension fund is funded exclusively by the contributions referred to in Article 2, and by what is obtained from the fund's investments; it does not withdraw funds from third parties.
2. The statutes of a company pension fund must include at least provisions regarding:
   a. the destination and purpose of the fund, including a description of its scope; b. the management of the fund;
   c. the investment of funds;
   d. the method by which board members are appointed; e. the collegiality of the governing body; f. cases in which the employer has reserved the right to reduce or terminate its contribution; g. amendments to the statutes, if financial conditions warrant them; h. liquidation of the fund, particularly regarding trustees' obligations and the distribution of the fund's assets.
3. The regulations of a company pension fund must state their effective date, and in case of amendments to those regulations, the effective date of such amendments.
4. The statutes and regulations of a company pension fund must, without prejudice to the second subsection, not contain provisions deviating from Articles 1 (third subsection), 5, 9, 10, 11, 15, and 17.

Artikel 3

1. The board of a company pension fund registers with both the Minister and the Bank within three months of its establishment, using a registration form established by the Bank, and submits a copy of the deed of incorporation, the statutes, and a board-certified copy of the fund's regulations, as well as a board-certified copy of the agreement(s) establishing that the connected employer or employers will make contributions regarding the minimum number of employees required under Article 2a, first subsection.
2. The board of a company pension fund also sends the Minister and the Bank a copy of every deed amending the statutes, and a board-certified copy of regulation amendments within three months after their creation.

Artikel 4

1. Without prior consent from the Bank, a company pension fund does not appoint persons to the following positions:
   a. directors and other persons who determine or co-determine the applicant's policy, b. members of the supervisory board or an organ performing a task similar to that of a supervisory board.
2. The request for consent referred to in the first subsection is accompanied by data regarding identity and antecedents, as well as all other information deemed desirable by the Bank to establish the reliability and suitability of the persons referred to in the first subsection, parts a or b.
3. A company pension fund does not appoint persons to a position as referred to in the first subsection, parts a or b, if the Bank considers that:
   a. the reliability of the relevant person is not beyond doubt, or b. the suitability of the relevant person, viewed individually or collectively, is insufficient for fulfilling the tasks of the company pension fund or exercising the relevant function at the fund.

Artikel 5

1. In the board of a company pension fund, representatives of participants and former participants hold at least as many seats as representatives of the employer or employers.
2. Board decisions are taken by an absolute majority of votes. In case of a tie, the proposal is deemed rejected. Each board member casts only one vote.

Artikel 6

1. The board of a company pension fund conducts adequate policies for the proper exercise of its duties and organizes its operations such that the proper conduct of its business is guaranteed.
2. The policies and operations referred to in the first subsection are, at a minimum, directed at:
   a. preventing conflicts of interest; b. preventing criminal offenses or other legal breaches by the company pension fund or its employees that could harm trust in the fund or financial markets;
   c. preventing relationships with participants or other third parties that could harm trust in the fund or financial markets;
   d. preventing other acts by the company pension fund or its employees that are so contrary to what is customary in social intercourse that trust in the fund or financial markets may be harmed.

Artikel 7

1. The Bank may issue guidelines to company pension funds regarding:
   a. proper exercise of duties, as referred to in Article 6, first subsection; b. the method for determining whether the reliability of a person as referred to in Article 4, first subsection, is beyond doubt, and whether that person is suitable for the intended function, including which facts and circumstances are considered. Guidelines may also relate to the implementation of provisions in other state ordinances.
2. The Bank may issue an instruction to a company pension fund if circumstances arise as referred to in Article 4, third subsection, parts a or b, directing it to follow a specified behavioral line regarding the points mentioned therein, in order to achieve that these circumstances are resolved within a deadline determined by the Bank.

Artikel 8

1. The board of a company pension fund sends written notification to the Bank if it observes payment arrears regarding an employer that has not fulfilled its obligation to transfer monthly contributions (its own contribution and the contribution withheld from employees' salaries) to the fund. This notification is made within 30 days after the end of the month in which payment was omitted.
2. The obligation mentioned in the first subsection rests on each of the board members.

Artikel 9
Pension funds designated for pensions are, unless Article 10 applies, used to transfer or reinsure risks arising from assumed obligations by concluding insurance agreements with an insurer holding a license as referred to in Article 5, first subsection, of the State Ordinance on Supervision of the Insurance Sector.

Artikel 10

1. Transfer or reinsurance of risks arising from assumed obligations need not take place if the fund operates according to an actuarial and business technical note regarding its policy, in which the financial structure and underlying foundations are motivatedly described. The first sentence does not apply if the Bank has objected to the note and the fund has not satisfactorily addressed this objection within a deadline determined by the Bank.
2. The board of a company pension fund submits the note referred to in the first subsection to the Bank as soon as the fund has obligations for which Article 9 does not apply. The board promptly submits any amendments to the note.
3. The board of a company pension fund for which transfer or reinsurance is not required submits to the Bank once every five years, or sooner if the Bank deems it necessary, a scientific balance sheet and profit/loss statement prepared by an actuary, as well as an actuarial report regarding the fund.
4. The actuarial report referred to in the third subsection is accompanied by a declaration from an actuary confirming that the provisions mentioned in the report have been correctly determined. The actuary may elaborate on their declaration or make reservations on specific points.
5. The Bank may issue general guidelines regarding the content of the documents referred to in the first and third subsections.

Artikel 11

1. The board of the fund submits statements to the Bank within six months after the end of each financial year, providing a clear picture of the fund's management and financial position.
2. The board accompanies the statements with a declaration of trustworthiness from an accountant. To prove that the statements have been examined by him, the accountant certifies them. The fund authorizes the accountant in writing upon commission to provide the Bank with all information reasonably deemed necessary for fulfilling the tasks imposed on the Bank by or under this State Ordinance.
3. If the fund's board fails to timely comply with the obligations mentioned in the first and second subsections, the Bank may impose a fine of Afl. 250 for each day the fund has been negligent. The fine is payable to the Bank; its amount may be adjusted by Ministerial regulation up to the maximum inflation rate calculated by the Central Bureau for Statistics.
4. The Bank establishes the models for the statements referred to in the first subsection.

Artikel 11a
The Bank may issue general guidelines and recommendations for management regarding administrative and financial organization, including financial administration and internal control.

Artikel 12

1. Persons against whom the Bank has objected to their appointment or maintenance are not authorized to prepare the documents referred to in Article 10, nor to perform other normal actuary duties on behalf of a company pension fund.
2. The Bank may object to the appointment or maintenance of an actuary only if, in its opinion, the person no longer provides sufficient guarantees that they will properly fulfill their entrusted tasks. The objection is communicated in writing to the relevant fund and actuary.
3. (Repealed).
4. (Repealed).

Artikel 12a

1. If, in the Bank's opinion, an accountant no longer provides sufficient guarantees to properly fulfill their duties regarding a company pension fund, the Bank may determine that this accountant is no longer authorized to issue declarations concerning such funds.
2. The Bank promptly announces a decision as referred to in the first subsection to the relevant company pension fund.

Artikel 13

1. The assets of a company pension fund, together with expected income, must be sufficient to cover pension obligations arising from the statutes and regulations, as evidenced by the scientific balance sheet referred to in Article 10, third subsection.
2. The Bank may issue general guidelines regarding the solvency of the company pension fund, which may indicate the minimum coverage ratio to be maintained.

Artikel 14

1. Investment of available funds by a company pension fund must be conducted in a solid manner.
2. The Bank may issue guidelines regarding the implementation of the first subsection.

Artikel 15
Claims of a company pension fund against employers, as well as investments in shares of their enterprises, are permitted up to an amount equal to one-twentieth of the fund's assets, increased by an amount equal to the fund's free reserve. The total amount of these claims and shares may not exceed one-tenth of the fund's assets.

Artikel 16
Deviation from Article 15 is permitted regarding any company pension fund if and to the extent that the employer has assumed new financial obligations, as well as regarding financial obligations of the employer related to increases in pension claims for past years; provided that adjustments to this article are pursued according to a Bank-approved plan.

Artikel 17

1. The board of a company pension fund ensures that each participant receives a text of the current statutes and regulations of the fund.
2. Articles 13, first subsection, 14 through 18 of the State Ordinance on General Pensions apply mutatis mutandis to the board of a company pension fund.

Artikel 18
Each board member of a company pension fund is obligated to ensure that the provisions of this State Ordinance, as well as the statutes and regulations of the fund, are observed, and that, to the extent Article 10 applies, the fund's policy is conducted in accordance with the actuarial and business technical note referred to in the first subsection of that article.

Artikel 19
(Repealed)

Artikel 20

1. Supervision over compliance with the provisions of or under this State Ordinance is entrusted to persons designated by the Bank President, working at the Bank. Such a designation is published in the Landscourant of Aruba.
2. The persons referred to in the first subsection are, exclusively to the extent reasonably necessary for fulfilling their tasks, authorized to:
   a. request all information; b. inspect business books, documents, and other data carriers, and copy or temporarily remove them for this purpose;
   c. enter all places, except residences without the explicit consent of the occupant, accompanied by persons designated by them.
3. If necessary, access to a place as referred to in the second subsection, part c, is provided with the assistance of the strong arm (police).
4. By state decree, containing general measures, rules are established regarding the manner of exercise of duties by the persons referred to in the first subsection.
5. Everyone is obligated to provide all cooperation required by the second subsection to persons designated under the first subsection.

Artikel 21

1. If statutes and regulations do not meet the provisions referred to in Article 2a, second, third, and fourth subsections (to the extent no exemption has been granted under Article 26), or if the Bank finds that a fund does not comply with Articles 9 through 11a and 13 through 15, or if a company pension fund no longer meets the existence condition referred to in Article 2a, first subsection, or if the Bank observes other signs that it considers threaten or may threaten the fund's solvency, the Bank may instruct the fund's board to comply with these provisions or Articles 9 through 11a and 13 through 15 within a deadline determined by the Bank, or to ensure that solvency is restored to a level determined by the Bank.
2. If the Bank does not receive a satisfactory answer from the board within two weeks of the date of the instruction, or if, in its opinion, insufficient or no follow-up has been given to the instruction, it may:
   a. instruct the fund's board in writing that from a specific time all or specific powers may only be exercised with the approval of one or more persons designated by the Bank, which instruction takes immediate effect; b. instruct the fund's board in writing to reinstate the fund's assets.
3. If a case, as referred to in the first subsection, requires immediate action in the Bank's opinion, the Bank may immediately execute the second subsection, part a, after having given the fund's board at least the opportunity to express its opinion on the immediate execution.
4. The fund's board provides cooperation to persons designated by the Bank. For damages resulting from acts performed contrary to an instruction as referred to in the second subsection, part a, those who perform these acts as board members of the fund are personally liable to the fund.
5. The decision to publish an instruction only takes effect after it has become final and unappealable. If