The Belgian government has reached agreement on the final details of its reform to occupational pensions in a move that is likely to produce a series of new industry-wide pension schemes.
Belgium’s Council of Ministers has agreed on the long-debated fiscal elements of the new occupational law which will now head for the parliament next month.
Henk Becquaert, head of the cabinet for Frank Vandenbroucke, the Belgian minister of social affairs and pensions, says the final approval took longer than expected as reaching a consensus on fiscal issues, particularly tax, has been particularly difficult due to the reach of the legislation.
Becquaert says the new law will cater for every element of secondary pensions as the existing Belgian system includes collective, individual and sector wide funds each with their own laws and individual characteristics.
The government had reached agreement last year on the so-called prudential aspects of the law and had created a level playing field among all pensions providers. It also agreed on social aspects of the law, that both company schemes and industry wide schemes should be covered by one piece of legislation.
Under the new law, occupational pensions will be funded externally and members will be guaranteed a long term annual return of 3.25%. The age at which supplementary schemes can pay out has also been raised to 60. Previously Belgians were able to claim a supplementary pension from their early 50s.
Belgium has nine industry-wide funds at present. In anticipation of the new law being passed, a further 10 sectors including the metalworkers and the electricians have prepared a framework and put aside funds to prime the schemes with once they are legal.
A further 10 to 15 sectors have looked into using the new legislation and launching a new industry-wide fund. Two years ago, one in three people were covered by supplementary schemes and the Ministry of Finance expects this to grow to over 50% once the law is introduced.
“The idea of the occupational pillar and particularly the industry-wide schemes is to cover everybody, even those in small companies. The advantage of the industry wide schemes is that you can create access to supplementary pension schemes for those that typically wouldn’t have access to a supplementary scheme,” says Becquaert.