The Ministry of Finance has recently made public a legislative bill that proposes the extension of the preservation period for pension rights for individuals who have ceased their regular monthly pension contributions. Previously, this period was set at 5 months but the new bill seeks to extend this to 12 months, mirroring the measures that were implemented during the coronavirus pandemic.
In the context of pension insurance, it’s crucial to note that a member of a pension fund is not only entitled to pension benefits, but also receives coverage in case of disability or death. However, this coverage is terminated if the individual fails to make contributions to their pension fund for a continuous period of 5 months. For the reinstatement of this coverage, it becomes necessary for the individual to complete health questionnaires and undergo the underwriting procedure all over again.
In light of the significant number of layoffs and furloughs triggered by the current economic climate, the Treasury Department harbors concerns that a large number of people may inadvertently lose these valuable benefits provided by their pension funds. The proposed extension of the preservation period is thus seen as a response to protect these individuals from potential financial hardship.
It’s worth pointing out that an employee who has been dismissed from service can still maintain the continuity of their rights for a period of one year. This is achievable by entering into a temporary life insurance agreement, referred to as an “esder risk”. Alternatively, the individual can choose to resume making contributions to the pension fund independently, thereby ensuring the continuation of their benefits.
