The Belgian government hammered out a surprise deal on first-pillar pension reform late on Sunday night. The agreement involves a pension bonus for older workers who choose not to retire early, and a cap on the growth of pensions for some civil servants.
The centre-left Belgian government gathered on Sunday to try to find a compromise on changes to the tax system. According to media reports, prime minister Alexander de Croo suggested to switch the discussion to first-pillar pensions as a tax deal proved increasingly elusive.
The government had already reached a partial pension deal last year, when it agreed to introduce a minimum pension. However, the problem with this deal was that it increased the costs of pensions to the taxpayer by 0.3%.
But in order to receive €847m in EU funds through the EU Covid Recovery Fund, the Belgian government had to present a cost-saving pension reform package by September.
The fiscal effects of the deal that was reached are still rather minimal, saving 0.2% of GDP by 2070, but are thought by the government to satisfy Brussels’ demands.
Under the new pension deal, pensions of retired civil servants will no longer grow automatically with salaries. However, the cap will only be applied above a certain salary, and pensioners in certain government sectors including the railways, the military and the prison system will be exempt.
Pension bonus
The deal also introduces a pension bonus for workers who continue working beyond 62, with a maximum of €22,645. The bonus, which is meant as an incentive for older workers to remain in the labour market, can be paid as a tax-free lumpsum upon retirement or take the form of an annuity.
The final element of the pension deal is an increase in taxes on combined first- and second-pillar accruals above €90,000 from 3% to 6%, from 2028. Since second-pillar accruals tend to be very low in Belgium, this tax was paid only for some 2,437 workers in 2022 and brought in less than €9m, according to Belgian financial daily De Tijd.
PensioPlus chair steps down after one-year tenure
PensioPlus chair Brigitte Bocqué stepped down from her post in May after just one year in charge.
According to a PensioPlus spokesperson, Bocqué has decided to go into early retirement from her main job as chief executive officer at energy firm Engie as of 1 August.
As a result, she had to give up her post at the Belgian pension federation too, the spokesperson added.
Bocqué has been succeeded by Jan De Smet, CEO of metals industry scheme Pensioenfonds Metaal OFP.
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