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Cardif Lux Vie



Company Background

Fortis Assurances Luxembourg has been in Luxembourg for more than 150 years now. The fruit of a merger in 1996 between AG Luxembourg and CGA Luxembourg, a subsidiary of the Belgium company CGER Assurances. Fortis Luxembourg - VIE S.A. employs 157 associates.
Dirk Billemon has been the CEO of Fortis Assurances Luxembourg since 14 June 2007.

With a full range of insurance solutions group, life, financial investments, asset structuring etc... intended both for private individuals and businesses, Fortis Luxembourg - VIE S.A. devotes all its resources towards offering you a quality service. Favoured as we are by our geographical location and our close cooperation with BGL BNP Paribas, we strive everyday to ensure that we are deserving of the trust that our clients place in us and to maintain our position as the leading bancassurer in Luxembourg. Our excellent positioning is also explained by the fact that our shareholders are first class: BGL BNP Paribas and Fortis Insurance International.

To promote our solutions, we rely on a structure which is based on a multichannel distribution approach. In Luxembourg, the network includes general agents, brokers and all the bank branches of BGL BNP Paribas. Overseas, alongside the synergies developed within the Fortis group, a number of partnerships have been developed with the most prestigious private bankers, to provide them with asset structuring solutions. In fact, Fortis Assurances Luxembourg may pride itself on its know-how in bordering countries and even in more remote countries such as Spain and Italy.

In 2008, in spite of a tough year for the market as a whole and for the Fortis Group in particular, Fortis Assurances Luxembourg had earnings of more than 10 million euros and managed to maintain its position, to grow in the field of corporate insurance products (corporate pension plans) and to increase the amount of premiums earned in the field of Non-life insurance. Fortis Assurances Luxembourg has confirmed its position as the 2nd largest "standard" life insurer (financial investment solutions) and comes 6th in the Fire, Accident, and Miscellaneous Risks sector.

Commended on several occasions (Trophee de l'Assurance in 2002, Standard & Poor's in 2005 and 2006), Fortis Assurances Luxembourg aims to offer its national and international clients one of the most efficient and simple complete financial services.

Key Products

Life

• Life

• Accidental Death and Disability

• Permanent and Total Disability

• Optional Supplemental Life

• Widow's and Orphans' Pensions

Disability

• Accident and Sickness

• Long-Term Disability

• Waiver of Premium

Pensions

• Managed Funds

Other

• Expatriate Programs: Life, Disability, and Retirement Benefits

Fortis Luxembourg is located on the internet at: http://www.fortisinsurance.lu

The Fortis Group is located on the internet at: http://www.fortis.com.
(Information available in Dutch, English, and French.)



In the Grand Duchy of Luxembourg, the Social Security benefits are very important. Nevertheless, there are still certain needs for additional private benefits, especially lump-sum death benefits and orphans' pensions for all members of the staff. In addition, there are frequently retirement pensions for top management whose earnings exceed the statutory ceiling.

The layout of the pension plan depends strongly on the size of the company. Small companies prefer defined contribution plans, while larger companies tend to prefer defined benefit plans. As the new law is imposing a strict financing for DB plans, even larger companies are choosing DC plans more and more.

Group Life and Pension Plans

1. Eligibility Requirements:

Vested rights can be deferred up to 10 years. This waiting period (if any) is waived for pre-retirement death and disability benefits.

2. Normal Retirement Age:

65 years for men and women.

3. Salary Base:

Usually the part of the annual salary in excess of the Social Security ceiling.

4. Pensionable Salary:

The plan is normally based on a final pay pension:

a) Average of the last five or ten years

b) Last salary

5. Retirement Benefits:

a) DB plan

Pension formula: P = (1.5% to 2% of S.2) x n

S.2 = salary base

n = pensionable service

DB plans tend to disappear more and more.

b) DC plan

25% of the salary (sometimes depending on the age of the insured)

6. Survivors' Benefits:

a) Spouse's pension:

Equal to 60% of projected or actual retirement pension.

b) Orphans' pension:

Equal to 10% of projected retirement pension payable to each child until age 21 or until age 25 if a full‑time student.

Pension doubled for full orphan.

c) Lump-sum:

One or two times annual salary for unmarried employees. Also provided for participants who have not yet met the eligibility requirements for coverage under the pension and spouse's benefit plans.

As the tendency is towards rather simple plans, most of the new pension plans only provide lump-sums instead of spouse and orphan pensions.

7. Financing:

Plans are only contributory if they are set up as a private pension fund or as a group insurance contract.

The member's contribution, if any, is calculated on the salary base (from 3% to 5%).

8. Funding:

Retirement benefits: Deferred annuities insured by level annual premiums or single premiums for a DB plan.

Pre-retirement death benefits: One-year term life insurance.

9. Dividends:

The group tariffs on a "with profit" basis were introduced as of January 1, 1974 and were revised on January 1, 1993.

These tariffs are based on an interest rate of 4% and were applicable for new business as of January 1, 1993, and for existing business as of January 1, 1994.

On April 1, 2005, the allowed guaranteed interest rate was changed and now equals 2.25%

a) Insured retirement benefits:

Each year, the technical interest rate of the tariffs is compared with the technical (financial and actuarial) results of the insurance company and thus is closely related to the average market interest rate.

This difference in percentage (the profit sharing rate) is applied to the respective increase of the mathematical reserves.

In 2003, the successive yearly dividends were capitalized at a net interest rate of 3.50%.

When the contract is settled, at normal or early retirement age, the accumulated dividends can be:

i. Paid in addition to the insured benefits, or

ii. Used to reduce the employer's cost, or

iii. Allocated to a separate insurance contract, which itself may be granted future profit sharing, or

iv. Refunded to the company at the end of each year

b) Pre-retirement death benefits:

In case of death before normal retirement, the benefits insured are increased with the accumulated dividends, if any.

Disability Benefits and Medical Care

1. Disability Benefits:

Due to the fact that it is very difficult to determine the statutory disability benefits, private plans are usually set up along the following lines:

a) Waiting period: 3 to 12 months.

b) Coverage: Pension paid in case of illness or accident of any kind.

c) Amount: Typical pension amounts to 70% or 75% of annual salary minus Social Security disability pension.

d) Additional coverage: Waiver of group life and pension premiums.

e) Benefits (waiver of premium and disability pension) determined in accordance with the degree of disability:

i. Under 25%: No benefits are paid.

ii. Between 25% and 67%: Benefits are paid in the same proportion as the degree of invalidity.

iii. 67% and over: 100% of the benefits are paid.

2. Medical Care:

No approval for "medical care" contracts in Luxembourg. These benefits are usually underwritten through specialized "Sickness Funds."

Leaving Service Benefits

An employee who leaves the company before retirement, and in general after five years' service, remains covered for reduced retirement and survivors' benefits under the book reserve system.

When retirement benefits are funded through a group insurance contract, the employee is fully and immediately vested in most cases.

Funding Systems

On June 8, 1999, a new law was passed that is effective from January 1, 2000. This law changed completely the basis of complementary pension plans in Luxembourg.

Three funding systems are possible with this new law:

1. Internal System (Book Reserve): In a self-administered pension plan or a "book reserve" arrangement, the employer has to give to each participant a written promise explaining the benefits that will be provided.

The contributions must be calculated on a sound actuarial basis. Each year, the employer has to set down in its balance sheet on the debit side a provision for promised pensions amounting to the mathematical reserve of those pensions, calculated at an annual minimum rate of 5%.

This internal system is not allowed for all risk benefits, but only for retirement benefits.

2. External System (Pension Fund): In this case, the pensions or the benefits are paid from an independent employer's fund (private pension fund) in which the company's and employees� assets are separated.

At the same time that the law for complementary pension schemes was being introduced, a new law covering the insurance of risk benefits through pension funds was legislated in Luxembourg.

Risk benefits can be insured through a pension fund; nevertheless, the pension fund has to reinsure this risk with an insurance company.

3. External System (Group Insurance): Retirement, pre-retirement death benefits, and disability benefits are funded through annual premiums (periodic or single) paid to an insurance company.

A group insurance contract may be contributory. Personal contributions can only be made to a group insurance.

The pay-as-you-go system is no longer allowed under the new law.

Government Control

Each pension scheme has to be approved by a new Government entity, the I.G.S.S. (General Inspection of the Social Security system). If the pension scheme does not conform with the new law, tax deductions will not be possible.

Each year, the company has to submit a complete file proving to the I.G.S.S. that the paid premiums are deductible. On the basis of this data, the I.G.S.S. will provide the company with a certificate. Only if the company can present this document to the taxation administration, will the premium be deductible (fully or part of it).