Pensions in Belgium are a key pillar of the country’s social security system, guaranteeing income after retirement. Belgium has a demographic rate close to the European average but suffers from a relatively low employment rate.
The tripartite structure of the pension system in Belgium consists of a mandatory public scheme and complementary pension plans. In this article, we will explore the structure, requirements, pension calculation, and the European pension system.
Structure of the pension system in Belgium
In Belgium, retirement is based on three main pension regimes:
- Salaried workers. Managed by the National Pensions Service (SNP).
- Self-employed workers. Managed by the National Institute for Social Security for Self-Employed Workers (INASTI).
- Public servants. Managed by the Federal Pension Office (OFP).
Three pillars form the basis of pensions in Belgium, allowing citizens to enjoy a decent pension. The first pillar includes pensions paid by Social Security. The second one refers to complementary pensions funded by additional contributions, such as group insurance and/or collective pension funds.
Finally, the third pillar represents individual complementary pensions (pension savings, life insurance, etc.). Lastly, an unofficial fourth pillar consists of assets built during one’s working life: rents, buying a secondary residence, etc.
Pension requirements in Belgium
Retirement age and early retirement
Currently, the legal retirement age in Belgium is 66 years, with plans to gradually increase it to 67 years by 2030. Full pension rights depend on the duration of the working career, requiring a total of 45 years of actual contributions, equivalent to 14.040 days of contributions.
If the worker does not reach 45 years of contributions, they calculate the pension amount proportionally based on the years worked in relation to the 45 years required for a full pension. The conditions for accessing early retirement are as follows:
- From 60 years, if the worker has accumulated 44 years of contributions.
- From 61 years, if the worker has accumulated 43 years of contributions.
- From 62 years, if the worker has accumulated 42 years of contributions.
Early retirement applies reduction coefficients, leading to a permanent reduction in the pension amount. This penalty is calculated based on how early retirement is taken, affecting the final amount the retiree will receive.
Pension calculation in Belgium
The pension calculation varies depending on the contribution scheme to which the worker belongs. For salaried workers, the pension is calculated based on the average annual salary during the working career.
The calculation formula is as follows: Monthly pension = (Average annual salary x 60% or 75%) x (Years of contribution / 45)
Actually, the 60% rate applies to workers without dependents, and the 75% rate applies to workers with dependents (e.g., spouse and children). If the worker has not contributed for the full 45 years, the pension will be proportional to the number of years contributed. Self-employed workers base their pension on the net income they declare annually.
Example and particular case
For example , to calculate the pension for a worker who has contributed 21 years in Belgium, with an average annual salary of 30.000 EUR, we will follow this formula:
Contributions in two EU member states
In fact, the European Union has developed a legal framework to coordinate the social security systems of its member states. This coordination ensures that people who have contributed in different countries do not lose their entitlement to social benefits, including retirement pensions (Regulation (EC) No. 883/2004 and Regulation (EC) No. 987/2009).
When a person has contributed in more than one member state, the pension is calculated as follows:
- Theoretical pension. An estimate of the amount the worker would receive if they had contributed their entire working life in a single country.
- Pro rata pension. Adjustment of the theoretical pension based on the actual time worked in each country. Each state will pay the proportional part of the pension based on the years contributed under its system.
- Internal pension. Each country also calculates a pension based solely on contributions made in its territory, not considering periods in other states.
Once both the pro-rated and national pensions are calculated, the beneficiary will receive the higher amount of the two.
Reforms and current challenges in the Belgian pension system
Finally, the pension system in Belgium faces challenges due to an aging population and financial sustainability. New reforms focus on increasing the retirement age and promoting complementary pension plans.
Pensions in Belgium, along with their integration into the European pension system, is a complex issue that requires a deep understanding.
Contact us at info@arthurmarin.com or +32 465 345 345. Both residents and expatriates should be informed about the regulations and options available to properly plan their retirement.
