Belgium needs major pension reform - OECD
BELGIUM - Belgium needs to contemplate major reform of its pension system, says the Organisation for Economic Cooperation and Development, which says the country faces a “crossroads”.
“What Belgium needs to envisage is a major reform of the public pension system, as in Sweden,” the OECD says in a 141-page report on the Belgian retirement system.
The OECD notes that all three statutory pension schemes - for public-sector, private-sector and self-employed workers -calculate retirement pensions differently. People are not all under the same pressure to remain in their jobs, it says.
“Retirement decisions should be actuarially neutral, and retirement arrangements should be brought into line with longer life expectancy,” the body says. “Thus retiring early should mean a smaller pension, and retiring later a larger one.”
“There has to be a consensus that a fundamental paradigm shift is required towards promoting employment instead of early exits from the labour force.”
“Belgium is a crossroads,” it adds. “Either it looks to the future and acknowledges that its best interest lies in stopping the premature withdrawal from the labour market of older workers…Or it decides to carry on promoting early retirement.”
It called for “far-reaching reform” to promote employment of older workers, saying public retirement schemes are “far too
complex, opaque and generally inequitable”.
The measures the government has drawn up to increase older workers’ employment rate would not be sufficient to reverse the trend.
And it adds that Belgium’s old-age fund, fonds de vieillissement, may not be sufficient to alleviate the pressures exerted by a declining and ageing labour force.
By 2050, the number of people aged 65 and over is likely to be half the number of people aged 20-64, compared with just over a quarter in 2000. “Hence there will need to be a massive transfer of income from workers to pensioners to cover additional pension costs.”
The OECD’s Belgian report is one of the first of 20 such reports to be published over the next two years.