Regulations on the Total and Partial Liquidation of Pension Plans Liberty BVG/LPP Collective Foundation
Contents Art. 1 Purpose and scope of these Regulations Art. 2 Preconditions for a partial liquidation Art. 3 Precondition for a total liquidation Art. 4 Employer s obligation to notify Art. 5 Ascertaining the preconditions Art. 6 Waiver of liquidation procedure Art. 7 Partial liquidation date Art. 8 Determination of the free assets or deficit (underfunding) Art. 9 Distribution plan and transfer of free assets Art. 10 Compensation of a deficit (underfunding) Art. 11 Partial or total liquidation date Art. 12 Determination of the free assets or deficit (underfunding) Art. 13 Distribution and transfer of free assets Art. 14 Compensation of a deficit (underfunding) Art. 15 Partial or total liquidation declaratory resolution Art. 16 Information for active members and pensioners Art. 17 Implementation Art. 18 Purposeless employer contribution reserves Art. 19 Cost coverage Art. 20 Interest Art. 21 Omissions Art. 22 Amendments in the Regulations Art. 23 Language Art. 24 Validity
Regulations on the Total and Partial Liquidation of Pension Plans Relying on Article 9 of its Articles of Association, the Board of Trustees of Liberty BVG/LPP Collective Foundation (the Foundation ) has adopted the following Regulations: Art. 1 Purpose and scope of these Regulations 1 These Regulations govern the preconditions and procedure for the total or partial liquidation of pension plans belonging to the Foundation. The termination of affiliation agreements may simultaneously satisfy the preconditions for a partial liquidation. In that case, separate Regulations for a Partial Liquidation of the Foundation are also applicable. Art. 2 Preconditions for a partial liquidation 1 The preconditions for the partial liquidation of a pension plan are satisfied if: a. the participation of an affiliated employer is significantly reduced following lay-offs on economic grounds and, as a result, a significant portion of the pension plan s active membership is obliged to leave the pension plan involuntarily or there is a significant reduction in the pension assets of the pension plan; b. the affiliated employer s company is restructured and the restructuring measures entail the involuntary exit of a significant portion of the pension plan s active membership or a significant reduction in the pension assets of the pension plan. In this context, the restructuring of a company means measures enacted by the employer which are not primarily designed to reduce the workforce and lay-off employees. These are generally measures of an organisational nature entailing, for example, the winding up of certain activities or the spin-off of an entire business unit to another company; c. an affiliation agreement is partially terminated whereby the active and disabled members exit the pension plan and the beneficiaries of retirement and survivor pensions remain. 2 For the purposes of sub-paragraphs a. and b. above, and depending on the number of active members insured in the pension plan before the start of the lay-offs or restructuring, the following reductions are deemed significant: between 1 and 5 active members: at least 2 involuntary exits or 30 % of pension assets between 6 and 10 active members: at least 3 involuntary exits or a 25 % reduction in pension assets between 11 and 25 active members: at least 4 involuntary exits or a 20 % reduction in pension assets between 26 and 50 active members: at least 5 involuntary exits or a 15 % reduction in pension assets 50 members or more: involuntary exit of at least 10 % of the active members or a 10 % reduction in pension assets. 3 The reduction or restructuring starts on the date the first member involuntarily leaves the company and exits the pension plan as a result of the corporate decision, and ends on the exit date of the last member leaving the pension plan involuntarily. An exit is deemed involuntarily when a member s employment contract is terminated by the employer. Members who hand in their notice within six months of being informed of the lay-offs or restructuring in order to anticipate termination by the employer or because they cannot accept the new terms and conditions of employment are also deemed to be leaving involuntarily. Art. 3 Precondition for a total liquidation 1 The precondition for a total liquidation of a pension plan is satisfied when an affiliation agreement is fully terminated. Art. 4 Employer s obligation to notify 1 The employer is obliged to promptly notify the Foundation about any downsizing or corporate restructuring liable to lead to a partial liquidation. Art. 5 Ascertaining the preconditions 1 In the event of a reduction in membership or a corporate restructuring, the plan management committee is responsible for ascertaining that the preconditions for a partial liquidation are satisfied. The partial or full termination of an affiliation agreement automatically triggers a partial or total liquidation procedure, except in the cases described in Article 6. 2 The Foundation is responsible for conducting the partial or total liquidation. The employer and the plan management committee shall promptly make available to the Foundation at its request all the necessary indications to enable it to fulfil its duties. Art. 6 Waiver of liquidation procedure 1 In the event an affiliation agreement is fully terminated, the liquidation procedure may be dispensed with if: a. the pension plan is transferred in its entirety to a new sponsor and the pension plan is not underfunded. In this case, the free assets of the pension plan and any provisions and reserves for fluctuation in asset value calculated in accordance with Article 8 shall be collectively transferred to the new pension institution; or b. on the termination date of the affiliation agreement, the pension plan had no active members or pensioners (liquidation of an empty agreement).
Partial liquidation of a pension plan in case of corporate lay-offs or restructurings Art. 7 Partial liquidation date 1 The partial liquidation date is the balance sheet date closest to the end of the reduction in membership or corporate restructuring (see Article 1). The partial liquidation date is authoritative for the calculation of any free assets or deficit (underfunding). Art. 8 Determination of the free assets or deficit (underfunding) 1 The amount of any free assets or deficit is determined as follows: a. available pension assets as at the partial liquidation date, consisting of: the surrender value of the collective insurance contract for active members less any outstanding contributions; the surrender value for the exiting pensioners; any realisable claims on the employer (especially outstanding contributions); securities at market value, balances on account and other assets of the pension plan; less: the vested termination benefits of exiting members still to be transferred as at the reference date (including any amounts temporarily withheld); other pension plan liabilities; employer contribution reserves (including employer contribution reserves with a declaration of renounced use); provisions for the financing of the partial liquidation procedure and any stamp duties on the transfer of securities. The pension plan s share of the free assets or deficit deriving from the partial liquidation of the Foundation is also taken into account. 2 The actuarial capital requirement on the partial liquidation date, consisting of the aggregate retirement savings capital of the active and disabled members and the mathematical reserves, calculated on the basis of the mortality tables of the new pension institution, for the pensioners to be taken over by the new pension fund but not more than the surrender value of the pensions calculated in accordance with Article 8.1 of these Regulations. 3 Intermediate result 1 a. The difference between the available pension assets and the necessary actuarial capital. 4 Intermediate result 2 a. If intermediate result 1 shows a negative balance and there is an employer contribution reserve with a declaration of renounced use, that reserve will serve as supplemental pension assets up to the amount required to offset the shortfall. When the partial liquidation is enforced, the corresponding employer reserves with renounced use will be written back in favour of the exiting members up to the amount of the actuarial capital deficit to be transferred out. 5 Reserves for fluctuation in asset value and provisions a. If intermediate result 2 shows a positive balance, the target amount of the reserves for fluctuation in asset value covering the actuarial capital requirements for the remaining and exiting members will be used up to an amount not exceeding the intermediate result. 6 In the case of a collective exit, in addition to the entitlement to free assets, there is a proportionate collective entitlement to any actuarial provisions provided actuarial risks are also transferred, and a proportionate collective entitlement to reserves for fluctuation in asset value. However, the collective entitlement to actuarial provisions and reserves for fluctuation in asset value corresponds at the most to the amount proportionate with the ratio of exiting members to total membership. The collective entitlement to actuarial provisions and reserves for fluctuation in asset value shall be reduced accordingly if, when they joined, the exiting members did not fully buy into the actuarial provisions and reserves for fluctuation in asset values. If, between the partial liquidation date and the date the transfer is made, the reference assets or liabilities vary by more than 5 %, any actuarial provisions and the reserves for fluctuation in asset value to be transferred shall be adjusted accordingly. 7 Free assets, deficit (underfunding) The difference between intermediate result 2 and the reserves for fluctuation in asset value. If the difference is positive, the pension plan has the corresponding free assets. If the difference is negative, however, the pension plan has a deficit. If, between the partial liquidation date and the date the transfer is made, the reference assets or liabilities vary by more than 5 %, the free assets or the deficit, as the case may be, shall be adjusted accordingly. Art. 9 Distribution plan and transfer of free assets 1 If the free assets are less than 5% of the retirement savings capital (as at the partial liquidation date) of the active members remaining in the pension plan, and on average less than CHF 1,000 per capita of this group of members, there will be no distribution of free assets. Otherwise, the following distribution plan is applicable: a. Distribution to active members and pensioners The group of active members consists of, on the one hand, the active members obliged to leave the pension plan involuntarily (sub-group of exiting active members) as a result of the lay-offs or corporate restructuring (see Article 1) and, on the other hand, the members remaining in the pension plan (sub-group or active members remaining in the pension plan) after the lay-offs or corporate restructuring. The group of pensioners consists of all the pensioners remaining in the pension plan after the lay-offs or corporate restructuring. The free assets are apportioned between the two groups proportionately to the ratio between the aggregate retirement savings capital (as at the partial liquidation date or the transfer date, if earlier) of the active members and the aggregate mathematical reserves (as at the partial liquidation date) of the pensioners.
b. IIndividual distribution of the active members share The distribution key is based on a member s insurance years and his retirement savings capital (as at the partial liquidation date or the transfer date, if earlier). The termination benefits transferred-in and any voluntary purchases made in the 24 months preceding the partial liquidation are not taken into account in the distribution plan. Withdrawals in accordance with the Federal Law on the Use of Pension Assets for the Encouragement of Home Ownership and transfers-out following a divorce decree disbursed in the last 24 months will be added to the vested termination benefit for the calculation of the share of free assets. c. Transfer of claims The exiting active members entitlement to free assets will basically be transferred individually. If at least 10 members transfer as a group to another pension institution (collective exit), their share of the free assets will be transferred collectively. The remaining members and pensioners share of free assets will remain with the pension plan without any individual apportionment. Art. 10 Compensation of a deficit (underfunding) 1 If, in accordance with Article 8, there is a deficit instead of free assets, the shortfall will be apportioned between the exiting and the remaining active members. The definition of these groups is the same as for the distribution of free assets. The deficit will be apportioned between the members concerned following the key set out in Article 8.2. 2 The share of the deficit apportioned to the exiting active members will be deducted from their individual vested termination benefits. Notwithstanding, the retirement savings capital, within the meaning of Article 15 BVG/LPP, may not be reduced. The remaining active members share of the deficit will remain with the pension plan without any individual apportionment. Partial or total liquidation of a pension plan in event of a partial or full termination of an affiliation agreement Art. 11 Partial or total liquidation date 1 The reference date for the partial or total liquidation is the date on which the affiliation agreement is partially or fully terminated. Art. 12 Determination of the free assets or deficit (underfunding) 1 Free assets are determined mutatis mutandis in accordance with Article 8. Art. 13 Distribution and transfer of free assets 1 Free assets are apportioned in accordance with the following distribution plan: a. Distribution between groups of members The free assets are apportioned between the following groups of members: active members exiting the pension plan as a result of the partial or full termination of the affiliation agreement; pensioners exiting the pension plan as a result of the partial or full termination of the affiliation agreement; pensioners remaining in the pension plan after the partial or full termination of the affiliation agreement; Pensioners means all persons drawing a retirement, spouse s, partner s or disability pension. The free assets are apportioned between the groups proportionately to the ratio between the aggregate retirement savings capital of the active members and the aggregate mathematical reserves of the exiting and remaining pensioners (as at the partial liquidation date). b. Distribution and transfer of the exiting members share The distribution key is based on a member s insurance years and his retirement savings capital (as at the partial liquidation date). Termination payments and voluntary contributions paid in the 24 months preceding the partial liquidation will not be taken into account in the distribution plan. Withdrawals in accordance with the Federal Law on the Use of Pension Assets for the Encouragement of Home Ownership and transfers-out following a divorce decree disbursed in the last 24 months will be added to the vested termination benefit for the calculation of the share of free assets. If all active members and any exiting pensioners transfer to the same new pension fund, their share of the free assets will basically be transferred collectively. In all other cases, the exiting members respective shares of the free assets will be transferred individually. The full amount apportioned to the group of exiting pensioners (provided they have an entitlement under Article 13.1) will be distributed individually pro rata the annual pension multiplied by ten. c. Distribution of the remaining pensioners share The free assets apportioned to the remaining pensioners will be distributed between them, pro rata their annual pension multiplied by ten, and applied to increase their pensions. Excepted are any pension plan claims against the remaining pensioners arising from a partial liquidation. These remain in the Foundation and are not distributed individually. Art. 14 Compensation of a deficit (underfunding) 1 If, in accordance with Article 12, there is a deficit instead of free assets, the shortfall will be apportioned between the exiting active members. The definition of these groups is the same as for the distribution of free assets, and any pensioners are excluded. The deficit will be apportioned between the members concerned following the key set out in Article 13.2. The share of the deficit apportioned to the exiting active members will be deducted from their individual vested termination benefits.
Art. 15 Partial or total liquidation declaratory resolution 1 The essential facts concerning the total or partial liquidation of a pension plan, including the amount of the free assets or deficit and the distribution plan, will be recorded in a partial or total liquidation declaratory resolution. In the cases contemplated in Article 6, no such resolution is required. 2 In the case of pension plans with individual asset management, the plan management committee shall decide whether the pension assets to be transferred are to be paid in cash or in securities together with the corresponding reserves for fluctuation in asset value. Art. 16 Information for active members and pensioners 1 If the audit shows that the preconditions for a total or partial liquidation of a pension plan are satisfied and if the liquidation procedure is implemented, the Foundation shall inform members and pensioners via the plan management committee about the circumstances and the procedure. 2 As soon as the distribution plan has been prepared and the partial or total liquidation declaratory resolution has been passed, the Foundation shall inform all affected members about the partial or total liquidation resolution, partial liquidation date, amount of free assets or deficit, amount and composition of any collectively transferred actuarial provisions, reserves for fluctuation in asset value, the form of transfer (individual or collective), distribution plan and right of objection and appeal. Within 30 days of receiving the information, the affected persons have the right to view the partial liquidation balance sheet, financial statements and other relevant documentation, subject to data privacy and protection rules, at the Foundation s premises and to file any objections. If the differences cannot be resolved to the parties mutual satisfaction, the Foundation shall grant the affected person a 30-day time limit to have the Regulatory Authority verify the pre-conditions, procedure and distribution plan and to hand down its decision. 3 There is no need to inform members and pensioners if the partial liquidation of the pension plan is the consequence of a partial termination of the affiliation agreement and the following criteria are satisfied: a. the pension plan is not underfunded and has no free assets, or b. the pension plan only has negligible free assets (less than 5 % of total pension assets), all active members and any pensioners transfer to the same new pension fund and the remaining pensioners are not taken into account in the distribution of free assets in accordance with Article 13.1. 4 If a partial liquidation was requested but denied by the Board of Trustees after considering the facts and circumstances, the Board of Trustees shall inform the applicant in writing that the application was denied, indicating his rights. Art. 17 Implementation 1 The distribution plan will be enforced as soon as it becomes final. 2 The distribution plan is enforceable if: a. no objections are filed with the Board of Trustees within the 30-day time limit; b. the Regulatory Authority has not been asked to examine a decision on an objection; c. the decision of the Regulatory Authority has become final and enforceable; d. an objection filed against the decision is not granted suspensive effect. 3 If, in the event of a deficit, the vested termination benefit is transferred out without any reduction, or with an insufficient reduction, the member must repay the surplus difference. Art. 18 Purposeless employer contribution reserves 1 If, in the context of a partial or total liquidation, employer contribution reserves can no longer serve their purpose because the employer no longer has any employees to be insured, the employer contribution reserves will be written back and credited to the free assets of the pension plan. Art. 19 Cost coverage 1 Cost contributions for the partial or total liquidation and for expert opinions in connection with objections and appeals will be charged in accordance with the Fee Schedule. Art. 20 Interest 1 The claim to free assets and to a share of the actuarial provisions and reserves for fluctuation in asset value does not earn interest during the partial liquidation procedure. 30 days after the procedure is completed, the obligation to pay default interest starts running. Default interest is payable at the minimum BVG/LPP rate. Art. 21 Omissions 1 If there are any omissions in these Regulations, the Board of Trustees shall adopt appropriate rules taking into account legal prescriptions and the intent and purpose of these Regulations. Art. 22 Amendments in the Regulations 1 The Board of Trustees may amend these Regulations at any time in accordance with the law, legal ordinances and the Articles of Association. These Regulations and any subsequent amendments shall be submitted to the Regulatory Authority for approval.
Art. 23 Language 1 All Regulations shall be construed and interpreted in the German-language version. Art. 24 Validity 1 These Regulations are effective from 26 June 2009. Schwyz, 17 June 2009 Board of Trustees of Liberty BVG/LPP Collective Foundation