The Luxembourg Parliament has passed a bill making improvements to supplementary pension schemes.
On Thursday 5 July 2018, the Chamber of Deputies passed Bill 7119 on Supplementary Pension Plans (RCP). The new provisions will bring various improvements to these plans, namely the extension of supplementary pension schemes to the self-employed and the liberal professions.
The current framework was limited to the plans put in place by a company and the only people likely to be affiliated were the employees of the company. The new provisions broaden the legal framework by allowing the establishment of supplementary pension schemes for the benefit of the self-employed and liberal professions.
The new scheme may be set up by a promoter (professional group of self-employed persons, insurer, pension fund manager, etc.) and must be approved beforehand by the General Social Security Inspectorate (IGSS). The plan can be organised as a pension fund or group insurance.
The law also introduces the deductibility of premiums paid into a scheme for the self-employed as special expenses, as well as a flat-rate and final discharge. The financing of supplementary pension schemes is deductible up to 20% of annual income.
Moreover, the reform transposes several European directives, including Directive 2014/50 / EU of the European Parliament and of the Council of 16 April 2014 on the minimum requirements to increase worker mobility between Member States by improving the acquisition and maintenance of preservation of supplementary pension rights.
Other modifications include amendments strengthening the protection of acquired rights. To illustrate, a transfer of rights can only be made if the new scheme guarantees at least the same benefits as the old scheme from which the rights transferred are derived. For the same purpose of the protection of rights, it was specified that the modification of a supplementary pension scheme can not have the effect of reducing benefits or reserves acquired during the past financial years. The employer is now required to keep its promise as originally formulated and can no longer replace a defined retirement benefit by simply transferring the present value of the acquired rights to a defined contribution plan.
The reform also introduces limits on the repurchase possibilities currently in place. A redemption will remain possible for small amounts and for the departure of an affiliate in international mobility for which he is no longer subject to Luxembourg health insurance.
Finally, in order to ensure good co-ordination between field officers, the new provisions define an exchange of administrative data between the Tax Administration and the IGSS.
