After 493 days of intense negotiations, Belgium has a new federal government1 The largest amount released for the new policy is invested in social policy, €2.3 billion out of a total of €3.2 billion. The federal government’s objective is to protect social security and secure its long-term financing. As a result, both the social security system and the pension system will be significantly modernised in the coming years. This contribution analyses social policy where it becomes clear that the first pension pillar – the statutory pension – will be strengthened and the second pension pillar – the employer pension – will be expanded.2
Statutory pensions are under pressure
In Belgium, as in many other European member states, the first pension pillar is coming under pressure due to rising ageing expenditure. To overcome this, the federal government proposes the three policy initiatives below.
Part-time pension and pension bonus
First of all, the federal government sees job creation as a priority. Indeed, it seeks to improve labour mobility for jobseekers between different employment sectors and employment regions. At the same time, a minimum employment rate of 80% by 2030 is targeted. To achieve these targets, investments are made in increasing the career length of (older) workers.
To this end, a part-time pension, on the one hand, and a pension bonus (again), on the other, will be introduced.3 The part-time pension will be an additional end-of-career measure and will be open to all workers.4 The pension bonus is intended to ensure that workers who work longer accrue more pension. All employed people will accrue this pension bonus from the moment they meet the early retirement rules.
Increase in statutory minimum pension
Besides these two measures, the minimum pension will also be increased towards 1,500 euro net for a full career of 45 years5. For incomplete careers, the amount will be reduced pro rata.
Taking into account the budget envisaged for this measure, this objective of the federal government appears almost impossible. According to CD&V chairman Joachim Coens, however, there is a “clear ambition”, but according to open VLD chairman Egbert Lachaert, there is “no guarantee that you will effectively end up 100 per cent at €1,500 net “6.
… increasing the importance of employer pensions
Supplementary pension plan for all employees
As the sustainability of statutory pensions comes under increasing pressure, the importance of employer pensions continues to grow7. The federal government therefore aims to introduce a supplementary pension plan for all employees as soon as possible. This pension plan must include a minimum contribution of 3% of the employee’s gross salary.
This policy initiative falls within the European Commission’s recently published action plan to strengthen the capital market union8. Indeed, in this action plan, the European Commission puts forward recommendations to boost pension savings in European member states that currently rely mainly on statutory pensions.
Increase investment return9
For pension funds and insurers, a sustainable investment policy that complies with ESG factors is also explicitly sought. In order to increase the return on supplementary pension provisions, efforts are simultaneously being made to reduce the costs of pension services provided by pension funds and insurers. In doing so, in cooperation with stakeholders, the legal obstacles facing pension funds and insurers will also be examined.
Improved pension information
In addition, the online pension portal mypension.be is being further developed. Indeed, the objective is to provide both a more accurate and a more complete picture of the financial future of the (future) pensioner. To meet this objective, the information included on this pension portal will be expanded so that all accrued pensions will henceforth be displayed. On the positive side, pensions accrued abroad will now also be displayed10.
Construction traffic on the way: pension reform
Taking the above into account, it can be said that the new federal government is paying close attention to social policy. Belgium’s pension system is under enormous pressure, giving cause for a major overhaul of the first and second pension pillars in particular. The new Minister for Pensions (Ms Karine Lalieux) is therefore tasked with presenting a proposal to the Council of Ministers on 1 September 2021 on the basis of which the Belgian pension system can be reformed.11 This reform must ensure that both the financial and social sustainability of the Belgian pension system can be guaranteed for the period beyond 2040.
Footnotes
1: For a cross-border analysis of the coalition agreement of the new Belgian federal government, see S.H.W.A. Bemelmans, ‘The agreement between Le Quattro Stagioni and the Brabançonne’, ITEM Blogs 27 November 2020.
2: For a more detailed analysis of the federal government’s social and pension policy, see the December edition of Vakblad Grensoverschrijdend Werken; S.H.W.A. Bemelmans, ‘The pension policy of the new Belgian federal government’, Vakblad Grensoverschrijdend Werken 2020/35.
3: Belgium already had a pension bonus. However, this pension bonus was scrapped on 1 January 2015.
4: Workers include employees as well as self-employed and civil servants.
5: Germany also has a variant of a minimum pension (Grundrente) with effect from 1 January 2021. For an analysis into the German Grundrente, please refer to the fifth file of the ITEM Cross-Border Impact Assessment 2020; https://itemcrossborderportal.maastrichtuniversity.nl/link/id/SAD4AGIyuAV63PMc.
6: See further G. Paelinck, ‘Minimum pension of 1,500 euros net? Open VLD president Lachaert: ‘No guarantee, but substantial increase”, VRT NWS 4 October 2020, www.vrt.be/vrtnws/nl (search on minimum pension).
7: For further evidence , see , among others, European Commission, The 2018 Ageing Report, Luxembourg: Publications Office of the European Union 2018 and European Commission, Pension Adequacy Report 2018: current and future income adequacy in old age in the EU (volume 1), Luxembourg: Publications Office of the European Union 2018.
8: Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions on a capital markets union at the service of people and business (a new action plan), COM(2020) 590 final.
9: The abbreviation ESG stands for Environmental, Social & Governance.
10: Within the Expertise Centre ITEM , PhD student mr. S.P.M. Kramer is conducting doctoral research on cross-border pension registers.
11: The framework conditions to be met by this reform are listed on pages 16 and 17 of the coalition agreement; A. De Croo & P. Magnette, For a prosperous, inclusive and sustainable Belgium, Brussels 30 September 2020.