European Trade Union Institute, ETUI.

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Belgium

11 July 2018

Belgium: second pillar pension reformed - restrictions for youngsters disappear

The existing system of second pillar pensions still contains restrictions for youngsters (below the age of 25 years) and temporary workers. The parliament has approved changes in the pension legislation, based on the implementation of the EU portability Directive, that will lead to a repeal of these restrictions. Earlier in 2018, the second pillar system was opened up for self-employed individuals.

The pension system consists of three pillars that supplement each other: the first pillar, or state pension; the second, a complementary pension settled via the employer or branch; and the third, individual pillar mainly through individual savings or insurances. Very often, the second pillar system is established as a result of collective bargaining between employer associations and the trade unions in the form of industry-wide pensions schemes. Employers are obliged to join these schemes unless the collective agreement allows them to contract out. The government had announced several modifications of the second pillar. The ministry of pensions drafted a bill, in the frame of the transposition of the ‘portability directive’, EU-Directive 2014/50/EU that formulates minimum requirements for the acquisition and preservation of the supplementary pensions right. The Parliament approved the bill on 21 June 2018 and from 1 January 2019 the supplementary pension rights will be acquired at the start of entry into service.

So far, the complementary pension regulations have provided for a minimum membership period of one year, starting at 25. As a consequence, workers on short-term temporary contracts and youngsters have not profited from the application of the second pillar scheme under the old legislation. The existing restrictions for young people and employees with a short-term contract will disappear from 1 January 2019. The trade unions have endorsed the changes, while the employers’ organisation VBO stated that the government went beyond the mandatory EU-provisions and talked about ‘gold plating’.

Already in February 2018, a law allowing the self-employed to accrue second-pillar benefits passed the Parliament. The law provides self-employed individuals with the choice to save more for their pension, benefitting from a tax reduction of 30% on contributions. The net tax on the pension savings will be around 12.5% of the contributions and self-employed individuals will be able to save up to 80% of their taxable salary across the first and second pillars. This means they can set up a contract with an insurer or a pension fund.

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