The Supplementary Pensions Law (WAP) requires employers to guarantee a minimum return on supplementary pension contributions for the duration of employees’ scheme membership. This minimum return is calculated on 1 June every year and takes effect on 1 January of the following year. Since 2016, it has been 1.75%; from 2025 it rises to 2.50%. How does this affect you as an employer?
The employer is responsible for the WAP guarantee and for ensuring the resulting minimum capital. If the insurer or pension fund fails to achieve the minimum guaranteed return, the difference must be made up by the employer. This change therefore has consequences for the pension plans in your company.
If your insurer offers an interest rate that is lower than the WAP guarantee, this may leave a shortfall that you will have to make up when your employee retires or leaves.
Current situation
Since 2024, most insurers have offered a guaranteed interest rate of at least 1.75% on the premiums of Branch 21 group insurance policies. In older Branch 21 policies that still offer a guarantee on both premiums and reserves, most insurers’ guaranteed rate is less than 1% on premium increases. We do not immediately expect insurers to bring their interest rates up to the new WAP guarantee of 2.50%. Among other reasons, the current economic conditions make this difficult. Even after a profit share has been allocated, it is doubtful whether a total net return of 2.50% can be achieved.
Our advice
It definitely makes sense to examine both the current return on your group insurance and the methodology used in the pension plan. To limit or even avoid unpleasant surprises such as underfunding, it may be advisable to consider other possibilities such as switching to Branch 21 group insurance with a higher guaranteed return, Branch 23 group insurance or a pension fund.