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Global Retirement Update January 2018
This Update summarises key recent developments related to the management of employer-sponsored retirement plans globally, including:
Regulatory changes that may require employers to take action to implement new or imminent requirements.
Planned changes and trends that may trigger a need to review local plans and plan actions.
Proposed changes that may need that may need consideration of potential impact, and monitor development.
IMPLEMENT REVIEW MONITOR
Canada: Implement Ontario pension reform bill Canada: Review Ontario’s new funding framework Australia: Monitor proposed measures to improve
and Québec’s final regulations on supplemental and annuity purchase regulation proposals. member outcomes and review progress of rules
pension plans. governing early release of superannuation funds.
Hong Kong: Implement new annual fees and Global: Review amendments made to IAS 19. Brazil: Monitor pension reform vote.
application fees for MPF intermediaries.
Malaysia: Implement reversion of employee EPF Morocco: Review Finance Law 2018 changes to Canada: Monitor Manitoba pension reform.
contribution rates. insurance premiums.
United Kingdom: Implement final auto-enrollment Pakistan: Review impact of SECP’s update to Costa Rica: Monitor marriage equality ruling.
thresholds and PPF levy determination for Voluntary Pension System rules.
2018/19.
United Kingdom: Implement new transfer value Poland: Review updated information on formation Hong Kong: Monitor progress of MPFA’s
regulations and advice requirements. of Employee Capital Plans (PPK). adjustment of minimum/maximum salary thresholds.
United States: Implement tax reform. Sweden: Monitor Parliament’s plan for state
pension reform.
Uzbekistan: Implement increase of mandatory United Kingdom: Monitor developments for bulk
contribution to INPS. transfers of contracted-out rights and new master
trust scheme regime.
If you have questions please contact your Aon consultant or email global.retirement.mailbox@aon.com
Please also use this mailbox to let us know how we could improve the ways in which we update you on new retirement topics of importance to you.
This document should not be construed as advice or opinions. The comments are based on preliminary analysis of publicly
Prepared by Aon available information and are provided on an “as is” basis, without warranty of any kind. Aon disclaims any legal liability to any
person or organization for loss or damage caused by or resulting from any reliance on this content. Aon reserves all rights to
Consulting | Retirement and Investment the content of this document.Key Updates for Implementation Canada: Implement Ontario pension reform bill On December 14, 2017, Bill 177, Stronger, Fairer Ontario Act (Budget Measures), 2017 received Royal Assent. Please refer to Aon’s Global Retirement Update from December 2017 available here for more details. Most of the provisions will not come into force until proclamation of a specific provision of this bill or another bill. Source: Bill 177, Stronger, Fairer Ontario Act (Budget Measures), 2017 For more information, or support, please contact Julianne Ralph. Canada: Implement Québec’s final regulations on supplemental pension plans On December 20, 2017, a Regulation to amend the Regulation respecting supplemental pension plans was published in the Gazette officielle du Québec. The regulation provides for various measures related to: Funding policies (required by January 4, 2019). Annuity purchasing policies. Variable benefits. Transfers of benefits between spouses. The regulation came into force on January 4, 2018. Please see Aon’s previous Information Bulletin that described the initial draft of the regulation (the final regulation is relatively unchanged—with the exception of provisions related to the content of the annuity purchase policy and details related to marriage breakdown/seizures). Source: Regulation to amend the Regulation respecting supplemental pension plans For more information, or support, please contact Julianne Ralph. Aon | Global Retirement Update | January 2018 2
Key Updates for Implementation (2) Hong Kong: Implement new annual fees and application fees for MPF intermediaries A Mandatory Provident Fund Schemes Authority (MPFA) press release sets out a new schedule of annual fees and application fees for MPF intermediaries. This launched on January 1, 2018 and coincided with revisions to fees for occupational retirement schemes (ORS) which are detailed in the same press release. For more information, or support, please contact Keren Li. Malaysia: Implement reversion of employee EPF contribution rates A December 21 Employees Provident Fund (EPF) press release served notice that the temporary reduction of the employee EPF contribution rate would lapse from January 1, 2018. The rate has reverted from 8% to 11% for workers below age 60. A temporary 4% voluntary contribution for those aged 60 and up is once again a statutory 5.5% contribution. Supplemental contributions are welcome and higher tax incentives for them are under consideration. For more information, or support, please contact Ozairi Othman. United Kingdom: Implement auto-enrollment thresholds for 2018/19 The 2018/19 earnings thresholds for automatic enrollment purposes have been confirmed: the earnings trigger will be unchanged at £10,000, and the limits for qualifying earnings will remain aligned with the National Insurance lower and upper earnings limits (increasing to £6,032 and £46,350 respectively). Companies should ensure their automatic enrollment processes are updated for the new thresholds. For more information, please view here. For more information, or support, please contact Jillian Pegrum. United Kingdom: Implement final PPF 2018/19 levy determination The PPF has released its final 2018/19 levy determination. Most of the data submission deadlines are now March 31, 2018 although where guarantees lead to more than £100K levy saving, guarantor strength reports must be submitted by March 29, 2018. The deficit-reduction contributions calculations have also been further simplified. Companies should now start estimating levies for their schemes and consider any actions to reduce levies. Please click here for the full report. For more information, or support, please contact Jillian Pegrum. Aon | Global Retirement Update | January 2018 3
Key Updates for Implementation (3) United Kingdom: Implement new transfer value regulations and advice requirements A change to new regulations for individual transfer values from April 6, 2018 has an extra complication for those with benefits valued close to £30,000—the threshold for compulsory advice. The unexpected change will impact DB schemes that pay transfer values in excess of the statutory minimum. For such schemes, additional calculations could be required to check whether the advice requirement applies. This may affect transfer processes and companies may need to review current member option exercises. Please click here for more information. For more information, or support, please contact Jillian Pegrum. United States: Implement tax reform On December 22, 2017, the "Tax Cuts and Jobs Act" was signed into law. The Act makes sweeping changes to corporate and personal income tax laws, generally effective starting with the 2018 tax law. Notable corporate tax provisions include a decrease in the headline income tax rate from 35% to 21% and the elimination or limitation of various deductions. Many U.S. companies will see lower marginal tax rates starting in 2018, though companies will need to perform additional analysis to determine the precise impact on their own marginal tax rate. For benefit plan sponsors expecting a decrease in marginal tax rates, the new law provides an incentive to accelerate pension contributions or other benefit costs to the 2017 tax year to maximize associated tax deductions.” For more information, or support, please contact Matthew Bond. Uzbekistan: Implement increase of mandatory contribution to INPS The President signed a resolution on December 29 doubling the mandatory contribution to individual accumulative pension accounts (INPS) to 2%. The contribution will remain tax-exempt. The resolution went into effect on January 1, 2018. For more information, or support, please contact Bart Steegs. Aon | Global Retirement Update | January 2018 4
Key Updates for Review Canada: Review Ontario’s new funding framework and annuity purchase regulation proposals On December 14th, the Ontario government released a description of proposed regulations relating to the new funding framework. The proposal provides the long-awaited details of the PfAD for going concern valuations, information on transition to the new funding framework, and more details on requirements for benefit improvements and contribution holidays. The intention is for the proposed changes to apply to valuation reports dated on or after December 31, 2017, that are filed after the new framework comes into force, except if otherwise noted. On December 14th, the Ontario government also released a description of proposed regulations relating to the discharge for the purchase of annuities. Draft regulations are expected to be released shortly. Sponsors of plans that are currently in the process of preparing an actuarial valuation should consider the implications of the new funding framework, their contribution strategy as well as the filing timing of such valuations. Over the longer term, plan sponsors should reassess the long term funding, investment policy and, where relevant, determine whether or not to formulate annuity purchase policies for their plans. Please view the Aon Information Bulletin with more details on these proposals here. For more information, or support, please contact Julianne Ralph. Global: Review amendments made to IAS 19 Following discussions over the last few years, the IASB issued on February 8th amendments to IAS 19. These clarify the calculation of the Profit & Loss expense for the pension plan for the remainder of the financial year following a plan amendment, curtailment or settlement. They do not change the calculation of the impact of the special event itself. For the majority of companies, the amendments will not result in any changes to reported results. Where results will change, relative to current practice, is when there is a special event during a year such as a benefit change, scheme closure or a buy-out. Broadly, the changes require a reporting entity to update the P&L for the remainder of the year following the special event to reflect fully market conditions at the date of the special event. To date, the P&L for the remainder of the year was based on a combination of start year market conditions and conditions at the date of the special event. The changes are applied prospectively, coming into force for special events occurring during accounting periods beginning on or after 1 January 2019, although earlier application is permitted. Note that no changes to IFRIC 14 (surplus recognition) have been announced and any such changes continue to be discussed by the IASB. For more information, or support, please contact Kirsten Miller. Aon | Global Retirement Update | January 2018 5
Key Updates for Review (2) Morocco: Review Finance Law 2018 changes to insurance premiums Finance Law 2018 was published in the December 25th issue of the Official Gazette: Premiums for individual or group retirement insurance policies may be transferred to other qualifying insurance companies. There will be an exemption from personal income tax for damages won in unfair dismissal cases. An existing employment income tax exemption for qualifying new hires in the private sector is now extended to associations and cooperatives. For more information, or support, please contact Sarah Mehdi. Pakistan: Review SECP’s update to Voluntary Pension System rules The Securities and Exchange Commission of Pakistan (SECP) has updated Voluntary Pension System (VPS) rules, incorporating a few notable additions. It details how benefits are transferred to a surviving spouse when a member dies before retirement age. The update also explains how a company can apply for registration as pension fund manager, as well as duties and obligations of pension fund managers. For more information, or support, please contact Vishal Grover. Aon | Global Retirement Update | January 2018 6
Key Updates for Review (3)
Poland: Review updated information on formation of Employee Capital Plans (PPK)
On February 15th the Ministry of Finance announced project of the final legislation on Employee Capital Plans (PPK). The proposed legislation was already
covered in the Global Retirement update of November 2017 at which time it was expected that the final legislation would not differ materially. This is indeed the
case. Please find below the final details:
• Co-financed by the state with 250 PLN welcome fee and 240 PLN a year state subsidy.
• The expected contribution structure will look as follows.
− The employer's basic contribution will be 1.5% of the remuneration eligible for Social Security Taxation (Only if the employee decides to only join a PPK),
and this can be increased with an additional contribution of 2.5%.
− The employee’s basic employee contribution will be 2.0% of the remuneration eligible for Social Security Taxation , and this can be increased with an
additional contribution of 2.0%.
• Employer’s contributions are tax deductible.
• There will be an automatic enrollment into the PPK for people aged between 19 and 55. Enrollment over 55 years is voluntary.
• The cost limit for financial institutions operating a PPK is 0.6%. This 0.6% is split into a maximum cost limit of 0.5% and additional 0.1% based on fund
performance.
• PPK’s will be available to all employees for whom pension contributions are paid to the Social Insurance Institution (ZUS). This means that the PPK will
eventually be taken up by companies employing at least one person for whom a ZUS contribution is paid (unless the employer has already established a
PPE within his company, paying a contribution of minimum 3.5%).
• The accumulated funds can be used to pay your own share when buying your first home. After a grace period not longer than 5 years, this share has to be
paid back to the PPK within 10 years without any interest.
• In case of a sever, long-term illness of the employee, spouse or child, 25% of your saved funds can be paid out immediately
• The assets accumulated in the PPK may be inherited if the participant dies
The auto enrollment is expected to start as per 1 January 2019 following a schedule:
Companies employing over 250 people - 1 January 2019
Companies employing 50 to 249 people - 1 July 2019
Companies employing 20 to 29 people - 1 January 2020
Remaining companies and the public finance sector - 1 July 2020
Companies should orient themselves on the impact of these expected changes.
For more information, or support, please contact Remigiusz Kostka.
Aon | Global Retirement Update | January 2018 7Key Updates for Monitor Australia: Monitor proposed measures to improve member outcomes The Australian Prudential Regulatory Authority (APRA) has launched a consultation on proposed measures to improve member outcomes: A new prudential standard would oblige registrable superannuation entities (RSEs) licensees to annually assess member outcomes by a "broader range of measures." RSE licensees would have new guidance on strategic and business planning as well as outcomes assessment. RSE licensees would offer transparent processes for opting out with all insurance products. Feedback is welcome through March 29, 2018. The revised measures are due in mid-2018 and would come into force on January 1, 2019. For more information, or support, please contact Ian Dudley. Australia: Monitor review progress of rules governing early release of superannuation funds The Revenue Minister announced that the Treasury will hold a comprehensive review of whether the current rules governing the early release of superannuation funds remain fit for purpose (including the victims of crime compensation). This area has seen little change since 1997 while the rest of the industry has evolved significantly. Early release is currently allowed on compassionate grounds or in cases of severe financial hardship, taxed in both cases as normal super lump sum. A report is expected in early 2018. For more information, or support, please contact Ian Dudley. Brazil: Monitor pension reform vote Despite last month's revisions, the government's pension reform bill could not muster enough votes for passage in the closing days of the last session. It is now due for a vote in mid-February with prospects possibly weakened, by some accounts, by preparations for this year's presidential and congressional elections. For more information, or support, please contact Dulcelene Giardim. Aon | Global Retirement Update | January 2018 8
Key Updates for Monitor (2) Canada: Monitor Manitoba pension reform On January 10, 2018, the Ministry of Finance announced a consultation on a review of The Pension Benefits Act (PBA). The consultation is in response to the recommendations released by The Pension Commission of Manitoba (as part of its required five-year review of the PBA). The consultation is focused on the following issues: New plan designs (target benefit pension plans and shared risk pension plans). Solvency deficiency funding rules. − Option 1—Eliminate solvency funding and enhance going concern funding. − Option 2—Introduce solvency reserve accounts. − Option 3—Eliminate solvency funding. − Option 4—Maintain the current solvency funding rules. Locking-in provisions and access to locked-in pension funds. Compulsory pension plan membership. Division of pensions on relationship breakdown. Clarification/legislative gaps. Sources: Province to Consult with Manitobans on The Pension Benefits Act Review Consultation Paper – The Pension Benefits Act Review Recommendations for Reforms to The Pension Benefits Act For more information, or support, please contact Julianne Ralph. Costa Rica: Monitor marriage equality ruling The Inter-American Court of Human Rights (IACHR) has ruled in favor of marriage equality in a case brought by the Costa Rican government. The President of Costa Rica has already committed to complying with the judgment. This could have much more than a ripple effect in South and Central America as 19 other nations have agreed to abide by IACHR decisions. Those that do not already fully recognize marriage equality include Barbados, Bolivia, Chile, the Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, and Suriname. For more information, or support, please contact Patricia Barra. Aon | Global Retirement Update | January 2018 9
Key Updates for Monitor (3) Hong Kong: Monitor progress of MPFA’s adjustment of minimum/maximum salary thresholds The Mandatory Provident Fund Scheme Authority (MPFA) is preparing its quadrennial adjustment of the minimum and maximum salary thresholds for the 5% employer and employee contributions to an MPF scheme. It has signaled that it plans to raise the Minimum Relevant Income from HK $7,100 to HK $8,000 and hike the Maximum Relevant Income from HK $30,000 to HK $45,000. The formal proposal is due by July 1, 2018. For more information, or support, please contact Keren Li. Sweden: Monitor Parliament’s plan for state pension reform Parliament's pension committee has agreed on a pension reform plan that would gradually raise the official retirement age for the state pension from 61 to 64, and increase the deferred retirement age from 67 to 69. The transition would stretch from 2018-2026. Under incentives for deferral, the actual retirement age is currently about 64.5. In addition: Consumer protections in the premium pension system (PPM) would include trimming the 850-fund market by about 300. This mirrors a Swedish Pensions Agency (Pensionsmyndigheten) plan that already has the government's approval and is slated to launch on July 1, 2018. The qualifying age for the means-tested guaranteed pension would rise from 65 to 66 by 2023 then be pegged to life expectancy from 2026. There will be a review of the tax regime for occupational pensions. For more information, or support, please contact Johan Keding. Aon | Global Retirement Update | January 2018 10
Key Updates for Monitor (4) United Kingdom: Monitor developments for bulk transfers of contracted-out rights The Government is consulting on regulations to enable bulk transfers of contracted-out rights to take place without member consent, to schemes that have never been contracted out—provided that the same protections are provided by the new scheme. The regulations are expected to take effect from April 6, 2018. Companies who wish to rationalise their pension arrangements will be able to do so by setting up a new scheme which can accept contracted-out benefits. Please click here for the full report. For more information, or support, please contact Jillian Pegrum. United Kingdom: Monitor developments for new master trust scheme regime The Government has been consulting on draft regulations to create a new authorization and supervisory regime for master trust schemes. From October 1, 2018, a master trust will be prohibited from operating unless it has been authorized. The Pensions Regulator is charged with authorising master trusts, and will assess each scheme against key criteria. Employers currently using, or planning to use, a master trust for their employees should check that it will be authorized under the new requirements. Please click here for the full report. For more information, or support, please contact Jillian Pegrum. Aon | Global Retirement Update | January 2018 11
Other Notable Updates
Country Action date Brief indication of the change Local Aon consultant
Congress passed a set of tax reform measures that will impact employer social security
Argentina Gisela Mariel Fridman
contributions.
The Ministry of Human Resources and Social Security's Social Insurance Management Centre
China has served notice that China's once-piecemeal social security system is now on track for Jayla Chen
universal coverage by 2020.
Eurasian
The five nations of the Eurasian Economic Union missed a deadline for enactment of a
Economic Colin Haines
multilateral social security agreement but they now expect to sign a final draft in 2018.
Union
The Member States in the European Council have reportedly voted for a temporary extension of
European
the exemption from central clearing for pension funds under the European Market Infrastructure Colin Haines
Union
Regulation (EMIR).
Parliament's Committee on Economic and Monetary Affairs has issued a working document on
the taxation of Pan-European Pension Products, It concedes that tax harmonization for all 28
European
Member States is "highly unlikely" but considers alternative scenarios. In addition, Parliament's Colin Haines
Union
new rapporteur for the pan-European personal pension plan initiative has previewed its
legislative roadmap.
Effective February 1, 2018, the Fiji National Provident Fund (FNPF) will allow preretirement
Fiji Ashley Palmer
withdrawal of funds in several additional circumstances.
The Public Revenue Authority has posted guidance on the taxation of insurance distributions
from group pension plans, which is 15% for periodic payments, 10% for lump sums up to
Greece George Kendouris
EUR 40,000, and 20% for lump sums over EUR 40,000. The rates are 50% higher for early
withdrawal.
The Secretary for Labour and Welfare has advised legislators that the social security system Keren Li
Hong Kong
will remain sustainable without adjustments to the old age allowance.
Aon | Global Retirement Update | January 2018 12Other Notable Updates (2)
Country Action date Brief indication of the change Local Aon consultant
Revenue eBrief No. 121/17 amended the Pensions Manual to clarify the tax treatment of
Ireland Shane Horgan
distributions from certain pension schemes to participants who have retired abroad.
Under Law No. 120VI-ZRK, the 11% employer social tax is dipping to 9.5% from
Kazakhstan Alexander Khan
January 1, 2018 and reverting to 11% from January 1, 2025.
The head of the State Social Insurance Fund Board (Sodra) outlined his pension reform plan in
Lithuania May 2018 Vilija Blekaityte
a recent press conference.
Insurance regulator, SBS, is holding a consultation on a draft resolution that would expand
Peru Gisela Mariel Fridman
investment options and enhance risk management for AFP private pension fund managers.
SBS has opened a consultation on revised mortality tables for the AFP private pension fund
Peru system, as stakeholders are concerned about the associated optimistic forecasts for increased Gisela Mariel Fridman
life expectancy.
The legislation establishing the voluntary pension fund (VPF) system included a trigger for
reducing the 2% cap on fees under management to 1.25% once total assets in the system
Serbia Bart Steegs
reached 0.75% of GDP. The financial institution regulator FISA recently determined that this
threshold was passed in 2016 so the 1.25% limit went into effect on January 1, 2018.
The Labor Ministry has decided to temporarily shelve an overdue "pre-pension" plan that would
Slovakia have allowed tapping the third-pillar pension as a bridge to retirement for people who found Alica Kolarova
themselves jobless a few years short of retirement age.
The Government published its review of automatic enrollment. It is satisfied with the overall
United
framework, but it is proposing several changes including a lower entry age of 18 and the Jillian Pegrum
Kingdom
removal of the lower earnings. The Government aims to implement changes in the mid 2020s.
Aon | Global Retirement Update | January 2018 13Current Regulatory developments: North America
Canada United States
State
Changes to improve provisions from the Canada Pension Plan from 2019. See GRU
January 2017.
Employers exploring opportunities to reduce sponsored benefits to balance cost impact
Design
of the above changes to the Canada Pension Plan.
Guidance note published on the selection of default investment options for members of
Pooled Registered Pension Plans. See GRU August 2017.
General trend of funding regulation to reduce/remove emphasis on solvency.
Québec: Funding requirements were changed in 2016 with retrospective effect from 1
January 2016. Various draft regulations have been published in 2017 to enact this
change and their retrospective nature. See GRU July 2017.
Ontario: Intention to introduce enhanced ongoing funding requirements, with reference Corporate tax changes may create opportunity to review timing of financing of DB plans.
Financing
to solvency funding requirements reducing to 85% of solvency liability. Regulations
passed for interim removal of the solvency requirements. See GRU July 2017. Implement pension mortality regulations. See GRU October 2017.
Ontario: New framework for target benefit multi-employer schemes, including exemption Review impact of new SOA MP-2017 mortality projection scale report. See GRU
from solvency funding amongst a wide range of changes. See GRU July 2017. October 2017.
Nova Scotia: Increased period over which to amortise solvency deficits. See GRU
August 2017.
Multi-jurisdiction: Consultation on changes to funding and wind-up asset allocation.
See GRU August 2017.
Operations
Guidance relating to avoidance of conflicts of interest in relation to fiduciary investment
provision. See GRU June 2017 and GRU August 2017.
Aon | Global Retirement Update | January 2018 14Current Regulatory developments: UK & Ireland
United Kingdom Ireland
Government committed to State Pension increases outpacing inflation.
Parliament's Joint Committee on Social Protection issued its Review of the State
State
State Pension Age proposed to increase to 68 from 2037 rather than 2044. See GRU
Pension (Contributory).
GRU August 2017.
Monitor proposals for mandatory Personal Savings Accounts for employees with other
non-State retirement savings. See GRU May 2017.
Requirements from April 2018 to alert members potentially inadvertently losing
guarantees due to a decision to access or transfer. See GRU August 2017.
Design
Ensure pension rights non-discriminatory for same-sex partners following recent Court Monitor proposals in Social Welfare and Pension Bill affecting process for closing DB,
judgement. See GRU July 2017. disability benefits and same-sex spouse’s benefits. See GRU June 2017.
Monitor GMP Equalisation Court Case to determine whether and how benefits may
need to be revised at cost to the sponsor. See GRU June 2017.
Review actions from Regulator’s annual funding statement. See GRU June 2017.
Financing
DC exit charges not permitted for new members from October 2017 , and limited to 1% Monitor Social Welfare and Pension Bill in relation to requirements on timing of
for earlier joiners. See GRU July 2017. valuation submissions, and scope for Regulator to overrule recovery plans. See GRU
June 2017.
Review new proposed PPF levy rules and any potential action to minimize levy
payment. See GRU October 2017.
Monitor impact of new money laundering regulations that may require trustees to hold
more information about members. See GRU August 2017.
Operations
Uncertainty for cross-border pensions and insurance contracts due to Brexit.
Review compliance with Regulator’s new 21st Century Trusteeship. See GRU October
2017.
Aon | Global Retirement Update | January 2018 15Current Regulatory developments: Continental Europe
CEE Rest of Europe
Latvia: The Solidarity Tax is unconstitutional and should be replaced or revamped by 1
January 2019. See GRU November 2017.
Poland: EU gender inequality concerns about State pension age drop in October to 65
(men), 60 (women). See GRU January 2017.
State
Poland: Annual cap on earnings subject to social security contributions to be removed
as per 1 January 2019. See GRU December 2017.
Romania: Changes to the Social Contribution structure. See GRU November 2017.
Ukraine: Review implications of approved pension reforms. See GRU September 2017.
Belgium: Review impact of Financial Services and Markets Authority (FSMA)
guidelines for DC plans. See GRU November 2017.
France: Most implementing regulations now published for new occupational pension
vehicle available early 2018. See GRU April 2017.
Armenia: Second-pillar pension scheme to become compulsory for all citizens by 1 July
Germany: Acquired rights decision. See GRU August 2017.
2018. See GRU December 2017.
Germany: Review opportunities from law passed to enable pure DC plans from 1
Estonia: Changes in the second pillar pension system in 2018. See GRU July 2017. January 2018. More information can be found here. See GRU June 2017.
Design
Georgia: Pension reforms expected in Q3 2018. More info can be found here. See Netherlands: Change to retirement age in pension plans from 1 January 2018. See
GRU November 2017. GRU May 2017.
Poland: Review updated information on Employee Capital Plans (PPK) in this issue. Switzerland: Review opportunity to establish 1e (pure DC) plan. More information here.
First potential milestone 1 January 2019 for companies employing more then 250 See GRU September 2017.
people. Turkey: Auto-enrollment key dates (Next milestones being 1 January 2018 for
companies with 50-99 people, Companies with less then 1.000 people per 1 January
2017 but more then 1.000 people per 1 April 2017). See GRU January 2017.
Turkey: New strategies under auto-enrollment under advisement. See GRU October
2017.
Operations
European Union: IORP2 Directive regarding risk management, governance and communications. See GRU January 2017.
European Union: Implement tighter requirements expected from 25 May 2018 under General Data Protection Regulations (GDPR).
Aon | Global Retirement Update | January 2018 16Current Regulatory developments: APAC
South East Asia Rest of APAC
India: Monitor proposal to raise the salary ceiling for mandatory participation in
employee provident funds from Rs 15,000 per month to Rs 21,000.
State
Thailand: The Mandatory Provident Fund (MPF) is coming (more information here.). India: Review the impact of added incentives for expanding coverage under the
See GRU June 2017. National Pension Scheme. See GRU November 2017.
India: Review the impact of the rise in the national age of joining the National Pension
Scheme. See GRU November 2017.
Hong Kong: Monitor proposals to remove the mandatory provident fund (MPF) offset Australia: Reduced cap on contributions.
from DB plans, and counter-proposal of higher contributions. India: New early retirement eligibility from Provident Fund.
Hong Kong: Monitor the launch of a public annuity scheme expected to launch in mid-
2018(See GRU May 2017) and proposals related to the MPF (See GRU June 2017). Japan: Risk sharing pension plans were introduced in 2017 and provide an opportunity
Design
for employers to remove DB risks with more efficient outcomes than typical DC plans.
Macau: Review the suitability of a new non-mandatory Central Provident Fund due to be
Employer contributions are fixed at a level intended to provide a target benefit, plus a
in effect next year. See GRU June 2017.
short-term additional contribution to build-up a risk buffer. Actual benefits vary
depending on the funding level. Latest information can be found here.
Japan: Increased EPI contributions.
Japan: Review opportunity to close EPFs in light of pending funding requirements from
2019.
Financing
Singapore: Implement the rules relating to transfer of member’s excess contributions. Namibia: Implement lower foreign investment cap over next 12 months. See GRU
See GRU November 2017. October 2017.
Japan: Monitor the progression of the investment rules under the defined contribution
plan reform law. See GRU November 2017.
Japan: A law that will require companies to review and, if needed, change DC vendors
Operations
at least once in 5 years is expected to be enacted in 2018 Q2.
Hong Kong: Review impact of new disclosure obligations from 2018 for ORSs subject
India: Review the impact of the EPFO’s new periodic evaluations. See GRU November
to CRS.
2017.
Aon | Global Retirement Update | January 2018 17Current Regulatory developments: Middle East, Africa & Latin America
Middle East & Africa Latin America
State
Brazil: Proposed changes to minimum retirement ages. See GRU January 2017.
Egypt: Enhanced early retirement terms.
Design
Chile: Monitor proposals for a 5% mandatory employer pension contribution to a new
Malawi: Implement mandatory employee contributions. See GRU June 2017.
government-run pension scheme. See GRU April 2017.
Nigeria: Monitor proposals to materially increase retirement lump-sums.
Financing
Nigeria: Implement changes to investment funds by 1 January 2018. GRU June 2017.
Nigeria: Monitor proposals to raise the minimum employer contribution to CPS from
10% to 12%. See GRU April 2017.
Operations
Kenya: Further changes regarding reporting, governance and tax changes from 1
January 2018.
Zimbabwe: Monitor the draft regulations on governance standards for pension fund
trustees.
Aon | Global Retirement Update | January 2018 18What other companies are doing From time to time Aon carries out global, regional and local surveys to share insight amongst peers, and events to share information with clients. Surveys open for participation Continental Europe Investment Survey –designed to identify trends and insights in investment management and fiduciary management. IORP II survey – this survey highlights the requirements for governance, risk management and communications that will apply to pension plans across the European Union by January 2019, and enables companies to self-assess their current compliance in order to prioritise areas for advice and action. Recently published insights UK DC Scheme Survey - this survey looks at all aspects of DC plans in the UK. Although the results are now published, the survey remains open to enable others to compare themselves against their peers. UK 2017 Fiduciary Management Survey – this survey examined the latest trends and practices in delegated investment and shares our views on the market. 2017 Global Pension Risk Survey – Reports on the survey findings are now available for all the local markets (USA, Canada, UK, Germany, Netherlands, Switzerland, Ireland and Japan) and a global report covering the perspective of those with global responsibilities and highlights from the local surveys. Upcoming events Rethink Pensions: European pensions and retirement savings – taking place 20 September 2018 in Frankfurt, Germany, targeted at those who are involved in decision-making for retirement plans regionally or globally, and covering opportunities for more effective DC, more efficient DB and effective governance of all plans globally. UK conferences and seminars – The link also references a range of topic-specific seminars being held in the UK in the coming weeks and months. Developing trends Aon Retirement and Investment Blog – twice a week with latest information and insights, with strong focus on investment market changes. Also visit the Global Retirement Management section of aon.com for access to broader information about global retirement topics. Please email global.retirement.mailbox@aon.com with any questions or to let us know how we could improve this update document. Aon | Global Retirement Update | January 2018 19
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