Branch 21
Help your employees secure their future with Branch 21: guaranteed returns and financial security for their supplementary pension.
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What is Branch 21?
Branch 21 group insurance solutions earn a guaranteed return. AG has to fulfil a long-term performance obligation.
This means that employer and/or individual premiums are capitalised at the guaranteed interest rate. Annual profit sharing may also be awarded. Profit sharing, however, is not guaranteed, may vary from year to year and will depend on AG Insurance's results and the economic situation. The insurer is under no statutory or contractual obligation to award any profit sharing whatsoever.
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Branch 21 at AG Employee Benefits
Branch 21 group insurance with a guaranteed return is by far the most popular way to save towards a supplementary pension in Belgium. That's why we offer a range of attractive Branch 21 products that respond to employer need for a safe-haven investment. When we add our extensive Branch 23 offering to the mix, it's clear that AG has positioned itself as the go-to source for the entire range of supplementary pension solutions on the Belgian insurance market.
How can we be sure to deliver the guaranteed return?
First of all, by investing primarily in fixed income securities, and more specifically high quality investment grade government bonds. These investments represent the largest share of assets in our Employee Benefits General Fund, where Branch 21 products with a guaranteed return are held.
We then ensure that the income from our investments covers our pension liabilities for the next 30 to 40 years. This is commonly known as the cashflow matching strategy. All of our previous performance obligations (4.75%, 3.25%, etc.) are fully covered by this method.
In order to remain consistent with the cashflow matching principle, we need to continuously adjust the guaranteed interest rate for our new pension commitments to reflect the reality on the financial markets.
We currently offer the following guaranteed interest rate:
- 1.75% for plans with a "guarantee on reserves"
- 0.50% for plans with a "guarantee on reserves and premiums"
How do we earn an additional return in Branch 21?
Our portfolio is primarily invested in bonds, but also in other asset classes such as equities and real estate as well as loans and infrastructure projects (for example, the renovation of over 250 school buildings). With these more dynamic investments, we seek out opportunities to invest more sustainably and add value to Belgian society and the economy.
On 31 December 2023, the asset mix in our investment portfolio was as follows:
By diversifying our portfolio, we are able to earn an additional return on top of the guaranteed return, in the form of profit sharing.
Since 2013, we have announced the average total minimum net returns for the coming year and the following year at the beginning of the year, per plan participant and per pension plan.
2024:
- 1.75% on plans with a "guarantee on reserves"
- 1.75% on plans with a "guarantee on reserves and premiums"
2025:
- 1.75% on plans with a "guarantee on reserves"
- For plans with a "guarantee on reserves and on premiums", the average total net return will be determined at a later date.
Branch 21: a safe haven investment on the supplementary pension market
Branch 21 group insurance plans benefit from a guaranteed return from the insurer. Whatever the investment results, the insurer is committed to a long-term performance obligation. The premiums paid by employers and/or members, capitalised at the interest rate guaranteed by AG, constitute capital that will be paid out on retirement.
Our branch 21 strategy focuses on security by investing mainly in government bonds and increasing returns through limited illiquidity.
Sustainability initiatives at AG
At AG, we are convinced that sustainable and responsible investing is critical to successful long-term investment. Environmental, social and governance factors (otherwise known as ESG factors) can also have a real impact on investment risk and performance.
For this reason, AG's general investment policy (FR - NL) always takes ESG risk scores into account in its analysis before investing in certain companies, and also ensures that controversial sectors are excluded.
For interested investors, AG has developed Branch 21 (FR - NL) products that take the approach to sustainable and responsible investing even further.
Want to find out more about Branch 21?
Feel free to contact our sales managers. They will be happy to answer your questions. You will find more articles about Branch 21 and Branch 23 below. You can also check the AG EB Invest Dashboard to get a clear and detailed overview of each of our funds.