Filling a gap in the public sector
Contractual workers in the public sector lack the pension rights of their full time colleagues. George Coats finds a man on a mission to redress this imbalance
Belgium's second pillar pensions provision is patchy. "There is a hole in public sector pension provision," says Philip Neyt, former chairman of the Belgacom pension fund. "Civil servants receive 75% of a final salary so don't need a second pillar. But as governments have become increasingly cost conscious the number of contractual employees in the public sector, especially in local government, has increased rapidly. Their pension will be around a half of that of their permanent staff colleagues doing the same job."
There has been some consideration of the issue, recalls Lut Sommerijns, secretary-general of the Belgian Association of Pension Institutions. "At the end of its term the previous government prepared a draft bill to establish a second pillar for those in public sector entities not benefiting from the pension rights of permanent employees to try to achieve a pension similar or equivalent to the civil servant pension."
She suggests it was not implemented because the government ran out of time, but others indicate it was opposed by trade unions demanding local authorities stop employing people under contract.
"However, I am sure it will be on the table again in the coming months," says Sommerijns.
But Jos Geuens, a member of the Antwerp provincial government, is not prepared to wait. "Like other provincial and local authorities we have both permanent staff with a certain statutory status and contractual people," he says. "This goes back 20 years when authorities started employing people under temporary contracts to do a one-off project. But as time passed the number of such people increased and now one third of the employees at provincial level have this status, that's 400 people. However, for the 70 municipalities in the province of Antwerp the figure is about 60%, which means 30,000 in total. So where we have an engineer who is a statutory employee and another doing essentially the same job under a contract arrangement, the former will get a pension of €1,800-2,000 and the latter €1,200, which is the same pension as those in the private sector."
Geuens' aim is to reduce the difference. "This year we intend to establish a second pillar pension for those contract workers," he says. "The provincial authority will contribute 33% of their wage and they will contribute a further 7%. We are not sure yet how much they will get but it should be about 70% of their salary, slightly less than the statutory employees. And I am sure that the trade unions will want to reach 75% in 10 years."
Geuens wants to make an open structure at the provincial level so the municipalities can join for their contractual employees. "We will have an actuarial study so we can make a provincial fund not only for our own contractual employees but also but also for the thousands working for the municipalities in the province. That way we will gain critical mass to achieve a return on the fund."
He is also the current chairman of the association of Flemish provinces. "That's Antwerp, East Flanders, West Flanders, Brabant and Limburg," he says. "Limburg intends to tackle this issue through a contract with an insurance company but the other provinces have not yet made a decision. Then there is the City of Antwerp with 5,000 people although it too may decide to have its own fund, and we have 308 municipalities in Flanders, and each would have 200 contractual employees or so, so that would mean 60,000 people and perhaps more.
"We in the province of Antwerp are taking the lead on this question not only in Flanders but also all over Belgium."
Geuens already has pensions experience. "I am also the chairman of the pension fund for the 8,000 employees of De Lijn, the Flanders public transport company," he says.