Benefits of collective insurance contracts that implement company pension commitments

Regulations: eleventh transitional provision Law Personal Income Tax

Beneficiaries of benefits received in the form of capital derived from contingencies that occurred after January 1, 2011, of insurance contracted before January 20, 2006, can apply the financial and tax regime in force on December 31, 2006, but only to the part of the benefit corresponding to contributions made up to said date (December 31, 2006), as well as to the ordinary premiums provided for in the original contract policy paid after said date.

This regime was the following:

1. Business contributions not imputed to workers

   The applicable reduction on the amount of the benefit received is 40% in the following cases:

   • When they correspond to premiums paid more than two years in advance of the date on which they are received.
   • When it comes to disability benefits, regardless of the period of time that has elapsed since the first contribution.

2. Business contributions attributed to workers

   The reduction percentages indicated below must be applied to the amount resulting from reducing the benefit received in the amount of the business contributions attributed to the worker, as well as in the amount of the contributions, if applicable, made by the worker himself.

   Reduction 75 percent	Reduction 40 percent
   Returns corresponding to premiums more than five years in advance	Returns corresponding to premiums more than two years in advance
   Benefits for absolute permanent disability or great disability	Remaining disability benefits

   However, a one-time reduction of 75 percent of the entire performance may be applied if the following requirements are met:

   • That these are insurance contracts concluded after December 31, 1994.

   • That more than eight years have passed since the payment of the first premium.

   • That the average period of permanence of the premiums has been greater than four years. Said average period is the result of calculating the sum of the premiums multiplied by their number of years of permanence and dividing it by the total sum of the premiums paid. That is to say:

     ∑ (Premiums x number of years of permanence) / ∑ (paid premiums)

   • In the event that there have been periodic or extraordinary bonuses, in order to determine the part of the total return obtained that corresponds to each bonus, said total return will be multiplied by the weighting coefficient resulting from the following quotient: in the numerator, the result of multiplying the corresponding premium by the number of years elapsed since it was paid until the benefit was collected and in the denominator, the sum of the products resulting from multiplying each premium by the number of years elapsed since was satisfied until the collection of the perception. That is to say:

     Premium x number of years elapsed from payment to collection /<!--StartFragment--> ∑<!--EndFragment--> (each premium x number of years elapsed from payment to collection)

     This same regime is also applicable to collective insurance contracts that implement the externalization of pension commitments agreed in collective agreements at a supra-corporate level under the name "retirement awards" or others, which consist of a benefit payable only once in the moment of termination due to retirement, signed before December 31, 2006.

   Important: As of January 1, 2015, the application of the reductions of the transitional regime is limited to benefits in the form of capital that are received within the deadlines indicated in section 3.