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SUSEP publishes new rules on operating rules and criteria for operating risk coverage offered in open supplementary pension plans
On December 28 and 29, 2022 respectively, CNSP Resolution No. 458/2022 and SUSEP Circular No. 685/2022 were published. Both refer to SUSEP Public Consultations (CPs 14/2022 and 15/2022), which provide operating rules and criteria for operating risk coverage offered in open supplementary pension plans. The new rules will come into force on 01/03/2023.
At the opening of the Public Consultations and in its statement, SUSEP defended the need to consolidate and simplify the norms in addition to encouraging the development of the market.
The main innovations are outlined below as well as the issues that were changed in the drafts in the Public Consultation.
CNSP Resolution No. 458 of 2022
The most relevant changes in relation to the current CNSP Resolution No. 201/2008 are the following:
- CNSP Resolution No. 458/2022 does not address the rules on communicability, which will now be dealt with in the regulation of survivorship coverage. It should be noted, that the regulation of survival coverage was the subject of Public Consultations numbers 26 and 27 of SUSEP and publication of the new norms is still being awaited.
- Change in the name of the contract entered into between EAPC and the endorser/instituter, which is now called ‘collective contract’. This was done in order to avoid possible confusion with the generic term ‘contract’ often used to refer to the pension plan.
- Inclusion of a list of the types of benefits that can be offered in the plans, namely (i) annuity for death (ii) annuity due to disability (iii) death benefit and (iv) disability income.
- Complementation of the forecast regarding the need to establish criteria for updating and changing values to include the possibility of recalculation, when applicable, of the collective agreement.
- Exclusion of the provision on biometric tables, which are the subject of SUSEP Circular No. 685/2022
- Exclusion of provision regarding the extension of plans to the new EAPC that are no longer accepted.
- Exclusion of provision regarding the duty of the settlor/approver to pay the contractually established fine regardless of EAPC’s communication to each participant since the matter must be included in the collective agreement.
- Exclusion of the agreement that provides for the cancellation of coverage due to non-payment of the contribution when paid in full by the institution/approver. This is in view of the inclusion of an article in the draft of Circular SUSEP No. 685/2022 providing that they must include of the regulation. Also, when applicable, the collective agreement, the consequences of non-payment of the contribution by the participant and/or the institution, within the agreed deadlines with the aim of establishing a suspension and/or tolerance period without mandatory immediate cancellation of the plan in case of default.
- Exclusion of the title ‘Provisions’ object of specific regulations
- Replacement of the term ‘guaranteed amounts’ by ‘institutes’ according to the nomenclature used in Complementary Law No. 109/2001
- Transfer of content about advertising to SUSEP Circular nº 685/2022.
In relation to the Public Consultation draft, the published rule presents the following differences:
- Specification of the term ‘disability’ to include that it applies to permanent total or partial permanent disability.
- Inclusion of a forecast regarding the possibility of completing and signing the application proposal also by the insurance broker.
- Change in relation to the maximum period for the EAPC to express its opinion on the acceptance or rejection of the proposal: the draft taken to the Public Consultation established that the period should be foreseen in the enrollment proposal and in the plan’s regulation. The published norm determined that if there is no manifestation from the EAPC within a maximum period of fifteen days from the date of filing of the application proposal acceptance will be automatic.
- Inclusion of a provision in the sense that the issuance and submission of the participant certificate within the 15-day period of the protocol of the registration proposal replaces the express manifestation of acceptance of the proposal by EAPC.
- Inclusion of a provision in the sense that the application proposal and the regulation may provide that the absence of a manifestation by the EAPC within the period mentioned above will characterize the tacit acceptance of the proposal. Also, if the regulation does not stipulate the tacit acceptance at the end of the period of 15 days after the protocol, the absence of an express statement on the result of the analysis will subject the EAPC to the applicable administrative penalties as well as characterize the rejection of the proposal.
- Inclusion of a provision that EAPC must formally notify the applicant, its legal representative or insurance broker of the decision not to accept the proposal with due justification for the refusal.
- Determination that the communication of non-acceptance must be made by any means that can be proven (and not just ‘in writing’) as provided for in the draft object of the Public Consultation.
- Provision that the participant certificate, in case of acceptance of the proposal by the EAPC must be issued and sent to the participant within a maximum period of thirty days from acceptance and not from the protocol date as provided for in the draft and
- Disposition that limited the loading percentage to a maximum of 30% (thirty) was eliminated.
CNSP Resolution No. 458/2022 revokes CNSP Resolution No. 201, of December 16, 2008, as well as CNSP Resolution No. 362, of June 21, 2018.
SUSEP Circular No. 685 of 2022
The most relevant changes in relation to the current SUSEP Circular No. 418/2011 are the following:
- Clarification that the FIE does not need to be exclusive to the benefit plan but the entire PMBC resource must be invested in a single FIE.
- Exclusion of restrictions regarding accepted premium payment methods. Whatever payment method is adopted the EAPC will be obliged to keep a record.
- Inclusion of a provision in the sense that the consequences of non-payment of the contribution, within the agreed deadlines, must be included in the regulation and, when applicable the collective agreement, in order to make the plans more transparent.
- Inclusion of a provision in the sense that the endorsement eventually issued as a result of a request for changes to the plan by the participant, must contain details of the changes made in relation to the plan previously in force.
- Exclusion of provisions on collective contracting since the matter is already dealt with in Resolution CNSP No. 458/2022
- Alteration of redemption payment methods so that payment methods that can be tracked by the banking system are contemplated.
- Changing the deadline for redemption payment up to the fifth business day following the registration of the request made by the participant and no longer until the fifth consecutive day.
- Exclusion of provision in the sense that the settlement or extended benefit may only be offered if the plan also provides for the possibility of redemption. All plans structured in the capitalization financial regime must offer the right to redemption, despite the fact they may or may not provide for the possibility of settlement and extension.
- Changing the deadline for carrying out portability from five calendar days to five business days counted from the filing date of the request made by the participant.
- Substitution of the term ‘assignee’ for ‘recipient’, for standardization of nomenclature
- Change from seven calendar days to seven working days counted from the effective portability of the deadline for EAPC to provide the participant with the respective supporting document.
- Inclusion of provision in the sense that exclusion of coverage is prohibited when the death or disability of the participant is due to acts performed by the participant in a state, mental insanity, drunkenness or under the influence of toxic substances.
- Inclusion of a provision in the sense that EAPC is responsible for all information contained in the advertising of the product that may be published, ensuring participants all rights and conditions as well as the transparency of the entire process.
- Inclusion of a provision in the sense that the regulation should provide that the plan cannot be canceled until all payments related to the financial assistance linked to it are paid.
- Inclusion of a provision in the sense that plans that provide for rate changes, whether due to age adjustment or other objective criteria, must clearly establish, in the regulation and in the actuarial technical note, the respective change criteria in order to ensure greater transparency to the participant.
- Inclusion of a provision in the sense that in the case of group plans in which the average rate criterion is not adopted for determining contributions the regulation must provide that contributions will be changed according to the age group of the participant or another objective criterion and the way in which the contributions will be effectively changed, including values or percentages, must be included in the collective agreement and in the application proposal.
- Inclusion of a provision in the sense that in the case of collective plans in which the average rate criterion is adopted to determine the value of contributions, the regulation should provide that contributions will be recalculated based on variations in the age composition of the group of participants and include in the collective agreement the periodicity of the recalculation and the way in which information will be provided to the participants that allow the monitoring of the collective agreement fees.
- Inclusion of a provision that the actuarial technical note of the plan, prepared by an actuary, must contain its technical structure and maintain a close relationship with the regulation.
- Exclusion of restrictions referring to biometric tables concerning the end of mortality table limits for risk coverage. The biometric tables must be informed in the actuarial technical note of the plan noting that for the calculation of factors related to survival the maximum limits of the mortality rate provided for in specific regulations must be observed. This is except in the case of survivors of disabled people and a situation in which a specific table more adherent to the mortality of this population can be used.
- Inclusion of a forecast in the sense that in the plans structured in the pay-as-you-go financial regimes, taxation based on EAPC’s own experience is allowed provided that the technical criteria used for calculating the rates are presented, which must be expressly included in the actuarial technical note.
- Inclusion of a forecast that, if specified in the biometric table plan with periodic updating, the version of the table presented in the actuarial technical note throughout the life cycle of the product must be used for the purpose of calculating the value of contributions regardless of the occurrence of an eventual update of the table after the approval of the plan.
- Provision that when the criterion for determining contributions by average rate is adopted, the EAPC must present in the actuarial technical note of the plan the criteria and form of calculation and recalculation of the rate, based on the age composition of the group of participants.
- Provision in the sense that EAPC must keep at SUSEP’s disposal a document that contains the calculation memory for calculating the new rates based on the criteria defined in the actuarial technical note, for each collective agreement.
The published rules do not present relevant differences compared to the draft in the Public Consultation by SUSEP and revokes SUSEP Circular No. 418, of January 11, 2011 SUSEP Circular No. 581, of December 19, 2018 Circular Letter Detec/Gab/n.º 02/2009, of August 17, 2009 and Circular Letter No. 05/2011/SUSEP-CGPRO, of July 7, 2011.
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