Regulations for the partial liquidation of the Foundation or pension funds of Tellco Pensinvest

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1 Regulations for the partial liquidation of the Foundation or pension funds of Tellco Pensinvest valid from Tellco Pensinvest Bahnhofstrasse 4 Postfach 713 CH-6431 Schwyz t pensinvest@tellco.ch tellco.ch

2 Table of contents 1 Purpose 3 2 Conditions for a partial or total liquidation of a pension fund Principle Conditions for a partial liquidation Conditions for a total liquidation 3 3 Procedure for the partial or total liquidation of a pension fund Establishment of conditions Execution of a partial or total liquidation Date of partial liquidation Date of total liquidation Calculation of pension fund s free assets / deficit Allocation of the free assets of the pension fund Allocation to active insured and pensioners Individual allocation of the share of the free assets or the deficit of the withdrawing active insured and pensioners Transfer of claims Share of provisions and fluctuation reserve of the pension fund Obligation to provide information and legal remedies 4 5 Procedure for the partial liquidation of the Foundation Resolution to partially liquidate the Foundation Notification of pension funds Legal remedies available to the insured of the pension funds Allocation of the free assets, deficit, fluctuation reserve and technical provisions to the pension funds Legal force and execution 5 6 Employer s inability to pay 6 7 Interest 6 8 Final provisions Cost allocation Provisions for continued existence Unregulated cases Issuing and amending the regulations Entry into force 6 4 Conditions for a partial or total liquidation of the Foundation Conditions for a partial liquidation Conditions for the total liquidation of the Foundation 5 TPI_09_220_07_e 1 2

3 1 Purpose These regulations govern the conditions and procedure for the partial or total liquidation of affiliated pension funds as well as the partial liquidation of Tellco Pensinvest (the Foundation). 2 Conditions for a partial or total liquidation of a pension fund 2.1 Principle In the case of a partial or total liquidation of a pension fund, the pension capital of the withdrawing insured is increased by an individual or collective share of the free assets. If there is a deficit, the retirement assets of the withdrawing insured are reduced individually, provided that this does not reduce their BVG retirement assets. 2.2 Conditions for a partial liquidation The conditions for a partial liquidation of a pension fund are assumed to be fulfilled, if a) the workforce of the affiliated employer is reduced substantially for economic reasons and results in the involuntary withdrawal of a substantial number of the active employees insured for retirement benefits or the withdrawal of a substantial share of the pension fund s retirement assets; b) the company of the affiliated employer is restructured and this measure results in the involuntary withdrawal of a substantial number of the active employees insured for retirement benefits or the withdrawal of a substantial share of the pension fund s retirement assets. The term «restructuring» refers to the implementation of measures by the employer that do not aim primarily to reduce the number of jobs and terminate the employment relationships of employees, but rather organisational measures that lead to the discontinuation of tasks carried out by the company itself or the outsourcing or transfer of entire company divisions to another company. The number of withdrawing insured is considered to be substantial pursuant to the previous paragraph if, depending on the number of active employees insured for retirement benefits before the workforce reduction or the restructuring begins, the pension fund reports up to 5 insured: at least 2 involuntary withdrawals or loses 30 % of the retirement assets 6 to 10 insured: at least 3 involuntary withdrawals or loses 25 % of the retirement assets 11 to 25 insured: at least 4 involuntary withdrawals or loses 20 % of the retirement assets 26 to 50 insured: at least 5 involuntary withdrawals or loses 15 % of the retirement assets more than 50 insured: the involuntary withdrawal of at least 10 % of the active employees insured for retirement benefits or loses 10 % of the retirement assets. The beginning of the workforce reduction or restructuring is deemed to be the date on which the first insured involuntarily leaves the company and the pension fund as a result of the company s decision to implement these measures. The end of the workforce reduction or restructuring is deemed to be the date on which the last insured involuntarily leaves the company and the pension fund. An insured is deemed to have withdrawn involuntarily if his / her employment relationship was terminated by the employer. However, a withdrawal is also regarded as involuntary if the insured terminates the employment relationship him / herself within six months of the announcement of the workforce reduction or restructuring in order to pre-empt a termination by the employer or because he / she does not accept the new employment conditions. c) The affiliation contract with the Foundation is terminated partially or totally. 2.3 Conditions for a total liquidation A pension fund is liquidated totally if the affiliation contract is terminated in full. However, a total liquidation is not carried out if a) The pension fund changes pension providers with all its assets and liabilities, rights and obligations and there is no actuarial deficiency; or b) The pension fund has neither active insured nor pensioners as members at the time of termination of the affiliation contract. 3 Procedure for the partial or total liquidation of a pension fund 3.1 Establishment of conditions The pension fund commission must establish whether a reduction in the workforce or a restructuring will lead to a partial liquidation of the pension fund. 3.2 Execution of a partial or total liquidation The Foundation is responsible for carrying out the partial or total liquidation of a pension fund. The employer and the pension fund commission are obliged to provide the Foundation on request with all the information it needs to carry out its task. 3.3 Date of partial liquidation The date of the partial liquidation is the end of the year following the end of the workforce reduction or restructuring of the company (cf. Art. 5.2). This is the date used for calculating the free assets and / or deficit. 3

4 3.4 Date of total liquidation The total liquidation is carried out on the date on which the contract is terminated. This is the date used for calculating the free assets and / or deficit. 3.5 Calculation of pension fund s free assets / deficit The pension fund s free assets or deficit comprises: a) The free assets of the pension fund; b) Any deficit of the pension fund; c) Any free assets or deficit allocated to the pension fund during the partial liquidation of the Foundation; d) The employer contribution reserve if the employer discontinues its business operations; e) A share in the reserve of unused cost contributions raised at the level of the Foundation (non-technical), provided that the balance on the last known reporting date equalled two annual contributions. 3.6 Allocation of the free assets of the pension fund Allocation to active insured and pensioners The pension capital of the active insured and pensioners is used to calculate the share of the free assets and the creditable deficit in the event of an actuarial deficiency. The group of active insured includes all persons who as active employees insured for retirement benefits involuntarily leave the pension fund during the workforce reduction or restructuring (cf. Art. 2.2) (sub-group of withdrawing active insured) as well as all employees who are still members of the pension fund when the workforce reduction or restructuring ends (sub-group of remaining active insured). The group of pensioners includes all pensioners who are still members of the pension fund when the workforce reduction or restructuring ends. The free assets are divided between the two groups at the ratio of the total restructured retirement assets without taking account of vested benefit deposits, purchases, withdrawals to finance residential property, withdrawals because of a divorce during the preceding 12 months (on the partial liquidation date or the prior withdrawal date) of the active insured to the total actuarial reserves of the pensioners (on the date of the partial liquidation) Individual allocation of the share of the free assets or the deficit of the withdrawing active insured and pensioners The free assets are calculated as a percentage of the pension capital of the remaining and withdrawing active insured and pensioners. The share of the withdrawing active insured and pensioners of the free assets or the deficit equals this percentage applied to their pension capital. If a deficit is allocated, this may not reduce the retirement assets pursuant to Art. 15 BVG. The share of the deficit that falls to the remaining active insured and pensioners is not allocated to individuals and remains with the pension fund. If no active insured and pensioners remain with the pension fund, any deficit is registered with the BVG Security Fund Foundation Transfer of claims As a general rule the assets due to the withdrawing active insured are allocated to them individually. If at least ten insured join a new pension fund as a group (collective withdrawal), their share in the assets is transferred collectively. The share of the assets that is due to the remaining active insured and the pensioners is not allocated to individuals and remains with the pension fund. 3.7 Share of provisions and fluctuation reserve of the pension fund In the case of a collective withdrawal, the insured have a collective pro rata claim to the technical provisions and fluctuation reserve in addition to their individual or collective claim to the free assets. When calculating this claim, the contribution made by the withdrawing group of insured to the creation of the provisions and fluctuation reserve must be taken into account. However, they only have a claim to the provisions if the actuarial risks are also transferred. The claim to the fluctuation reserve equals the pro rata claim to the pension capital. There is no collective claim to technical provisions and fluctuation reserves if the partial liquidation was caused by the group of withdrawing insured. 3.8 If the relevant assets or liabilities change by at least 5 % between the date of the partial liquidation and the date on which the provisions, fluctuation reserve and free assets are transferred, the funds to be transferred will be adjusted correspondingly. 3.9 Obligation to provide information and legal remedies All active insured and pensioners of the pension fund must be informed in a suitable manner and in good time. The information must include the fact that a partial liquidation is carried out as well as details on the procedure and the distribution plan. After receiving the information, the active insured and pensioners may request to inspect the relevant balance sheet and the actuarial report. The active insured and pensioners can lodge an objection with the board of trustees against the conditions for a partial liquidation, the procedure and the distribution plan within 30 days of receiving the information. 4

5 The board of trustees must discuss the objections after hearing the opponents and answer them in writing. If objections are approved, the procedure or distribution plan must be adapted and new information must be sent to all active insured and pensioners. The board of trustees must inform the opponents in the reply to the objection that they can have the conditions, procedure and distribution plan investigated by the supervisory authority within 30 days. The decision of the supervisory authority can be appealed to the Federal Administrative Court within 30 days. An appeal against the decision of the supervisory authority only has suspensive effect if the departmental chairman of the Federal Administrative Court grants this ex officio or on application of the appellant. If no suspensive effect is granted, the decision of the Federal Administrative Court can only go in favour of or against the appellant. The decision of the Federal Administrative Court can be appealed to the Federal Tribunal within 30 days. An appeal against the judgement of the Federal Administrative Court only has suspensive effect if the Federal Tribunal judge grants this ex officio or on application of the appellant. If no suspensive effect is granted, the decision of the Federal Tribunal can only go in favour of or against the appellant. The partial liquidation becomes legally binding and can be executed if a) no objections are filed; or b) all objections could be settled amicably; or c) the supervisory authority has issued a legally binding final decision. 4 Conditions for a partial or total liquidation of the Foundation 4.1 Conditions for a partial liquidation The conditions for the partial liquidation of the collective Foundation have been met if both of the following conditions are fulfilled cumulatively: a) Cancellation or partial cancellation of an affiliation contract b) The free assets or deficit of the Foundation equals more than 2 % of the pension capital of the pensioners managed at Foundation level. 4.2 Conditions for the total liquidation of the Foundation 5 Procedure for the partial liquidation of the Foundation 5.1 Resolution to partially liquidate the Foundation The board of trustees decides that the conditions for the partial liquidation of the Foundation are fulfilled. 5.2 Notification of pension funds The Foundation informs the pension funds in writing of the decision to carry out a partial liquidation and informs them in particular of the facts, the amount of the free assets or the deficit, and the next steps in the partial liquidation procedure. 5.3 Legal remedies available to the insured of the pension funds The insured of the pension funds have the right to inspect the Foundation s records and, if desired, appeal against the form in which the partial liquidation will be carried out within 30 days of receiving the above information from the Foundation. If their differences cannot be settled amicably, the Foundation sets the insured a deadline of 30 days to submit a request for a review to the competent supervisory authority. The conditions and procedure of the partial liquidation and the calculation of the free assets or deficit are then reviewed and a final decision is taken. 5.4 Allocation of the free assets, deficit, fluctuation reserve and technical provisions to the pension funds The pension capital of the pensioners managed at Foundation level determines the distribution of the free assets or the deficit as well as the fluctuation reserve and the technical provisions. The pro rata free assets or deficit as well as the pro rata fluctuation reserve and technical provisions are transferred to the pension funds whose partial or total liquidation leads to the departure of pensioners managed at Foundation level (cf. Art. 3.5 c of these regulations). 5.5 Legal force and execution The partial liquidation becomes legally binding and can be executed if a) the insured of the pension funds affected by the partial liquidation do not file any objections; or b) all objections could be settled amicably; or c) the supervisory authority has issued a legally binding final decision. The supervisory authority decides if the conditions for a total liquidation of the Foundation are fulfilled. 5

6 Employer s inability to pay If the employer has not paid all outstanding contributions up to the partial or total liquidation of its pension fund and bankruptcy or similar proceedings are initiated

If the amount that was written off can subsequently be collected in full or in part from a payment by the employer or the Security Fund, the claims of the affected insured are recalculated, taking

6 6 Employer s inability to pay If the employer has not paid all outstanding contributions up to the partial or total liquidation of its pension fund and bankruptcy or similar proceedings are initiated against the employer, the claim for outstanding contributions is temporarily impaired to zero when the free assets are calculated. If the amount that was written off can subsequently be collected in full or in part from a payment by the employer or the Security Fund, the claims of the affected insured are recalculated, taking account of the increase in the available assets, and the additional share is paid out after deduction of the payments already made. 8.3 Unregulated cases The Foundation will decide on any cases that are not expressly governed by these regulations by applying the regulations mutatis mutandis in accordance with the legal provisions. 8.4 Issuing and amending the regulations The regulations and any later amendments are issued by the board of trustees and approved by the supervisory authority. 8.5 Entry into force These regulations enter into force when the approval of the supervisory authority becomes final and legally binding. 7 Interest The individual and collective claims earn interest at the BVG minimum interest rate if they are transferred in cash. The interest is payable 30 days after the date on which the distribution plan became final and binding, but at the earliest 30 days after the date on which all the information required for a transfer is available. Schwyz, The Board of Trustees 8 Final provisions 8.1 Cost allocation The pension fund in question can be expected to pay an additional cost contribution to cover extraordinary expenses relating to the partial or total liquidation of a pension fund, expert opinions relating to the settlement of objections and appeals, etc. 8.2 Provisions for continued existence Thomas Kopp Bruno Christen Chairman Member In case of differing interpretations, the German text is authoritative. Provisions for continued existence can be raised. The amount is calculated by the pension actuary during the partial or total liquidation. 6

Regulations on the Partial Liquidation of the Foundation and the Partial or Total Liquidation of a Pension Scheme ( Partial Liquidation Regulations )

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