Annuities & Retirement Insurance Plans

Random rights or acquired rights. Any new defined benefit plan will provide rights that will be ultimately acquired by the beneficiaries (even if seniority conditions may exist). These rights will remain payable in the form of an annuity, from the liquidation of the old-age insurance scheme, but they will remain in effect even if the beneficiary leaves the company before retiring.

With regard to existing schemes, new rights cannot be granted (with the exception of schemes created and closed to new participants, the date of effective implementation of the European directive. At this stage it is not clear whether companies will be forced to convert their existing plans into established schemes. The article assumes that this obligation does not exist and it is probable that the choice is left to the company Acquired rights secured by the insurer / mutual / providing institution may be transferred to contracts of the same nature, at this stage it is not mentioned what happens to the amounts in the event of death before retirement.

Havermann Financial Planners. The level of rights acquired each year is now limited to 3% per year, and the rights are calculated according to the salary for the year of acquisition. They are no longer a function of the final salary, and the acquired rights are reassessed both for the beneficiaries present in the company and for those who left it, with a coefficient equal to the annual revaluation of the upper limit Social Security.

These rights will depend on compliance with the conditions of performance, including for non-performing employees. These conditions may apply to the past year or previous years. This limit is consistent with consistent recommendations and the 2016 law in order to avoid certain biases observed in the past.

An important feature: rights cannot be retroactive. This point is structured in the sense that many defined benefit plans were management plans. To these managers, when they entered the category of personnel involved in the scheme, the rights to their past career in the company were recounted. Therefore, it will no longer be possible to construct a substantial pension supplement for a relatively short period.

From the point of view of accounting, the conversion of random rights into acquired rights will mechanically lead to an increase in meaningful obligations as the turnover ratio disappears. At this stage, in any case, there is no provision on the introduction of a value (Obligation for accumulated payments) in accounting standards.

It will be necessary to wait until the position of the National Accounting Council has a position in accordance with the French norm. Finally, in addition to a few editorial elements that have yet to be clarified, the draft order complies with recent events and the law. The reception of these new devices, however, is difficult to evaluate to date. Failure to restore former rights casts doubt on one of the advantages of the old, which allowed the creation of significant pension rights in a relatively short period of time. However, a company with such a plan will have a pay package component that may be significant to senior executives.

The transfer of pension risks to an insurance company requires a significant investment of time and resources, therefore it is extremely important to create the right processes and control mechanisms from the very beginning.

These should include the following: – Set clear goals from the start, so you can determine when the price will be fair. For example, you can determine the desired price threshold that will meet the expectations of additional assessed contributions, or the price threshold that will correspond to the expected impact on financial results. By examining these factors before applying for an annuity quota, you increase your chances of a successful risk transfer. In fact, setting clear goals in the early stages of the process, the decision-making process should be more clear and simple. – Make sure that all decision makers are available on the day the agreement is to be reached.

This can be a problem to ensure that senior managers are fully informed and have enough time to complete the transaction on an agreed date and time with the selected insurer. Schedules are usually fixed, and an agreement may fail if approvals cannot be received on time.