Old Age Pension Scheme for Employees

Mandatory insurance

• All employees (incl. miners and seafarers).

Opting in

• Persons to whom the social security legislation for employees has been extended, i.e. public service contractors, mandatories of non-commercial organisations, freight and passenger transport operators.
• Flight personnel in the aviation sector, artists (if working as employees), professional journalists, members of teaching staff of private educational institutions.

Excluded

• Employees covered by the old age pension scheme for the public sector, such as workers in public administration  (i.e. civil servants), HR Rail.
• Persons who do not have to pay social security contributions (pensions sector), such as students, certain domestic workers.

Voluntary insurance

• Not possible.

General finances

• Mainly PAYG-financed from social security contributions (employees and employers) (about 75%).
• Partly financed through alternative financing mechanisms (20%) (VAT and withholding tax) and an annual ‘government and balance grant’ to fill deficits.

Contribution rates

• Fixed share of monthly earnings (38.07%) without contribution assessment ceiling. In addition, there is a system of special contributions.
• Contributions shared between employer (25%) and employee (13.07%).
• The social security contributions paid are a global amount (instead of individual percentages per social security sector) and are used for the global financial management of all benefits of the social security system for employees. This global management finances all social security branches according to their needs and not according to fixed percentages.

Taxation of contribution payments

• Contributions are tax-deductible.

• The ‘Federal Pension Service’ (FDP) calculates and pays the retirement benefit

Qualifying conditions

• The statutory retirement age is 65; it increases to 66 in 2025 and to 67 in 2030.
• No minimum insurance period; maximum of 45 career years.
• Termination of previous employment is a precondition for claiming pension benefits.
• The retired person must reside in Belgium.

Early retirement

• Early retirement is possible and depends on the length of career/insurance period (opening rights to a pension): available at age 60 after 44 years of career, age 61 after 43 years of career, and age 63 after 42 years of career; available without negative (permanent) adjustments to pension benefit.

Deferred retirement

• The person can delay his/her application for an old age pension and continue to work provided that the employer agrees.
• In order to promote longer working lives, the ‘principle of the occupational record unit’¹ does not apply in case a person decides to work more than the specified maximum number of days (14,040 days). (There is one exception: if the number of days above this maximum are days that are assimilated with working days due to unemployment, they will not be counted.)

Combining employment & retirement

• Employees can continue to work after reaching the retirement age, provided that the employer approves.
• In principle, it is possible to earn an unlimited amount of extra income if the person has retired (after statutory retirement age) or has completed a sufficient number of career years (45 years). However, these periods do not count for additional pension rights.
• Earnings limits exist for early retirement after insufficient career years.

Pension benefits

• Mainly calculated on the basis of contributions paid throughout working career (max. of 45 years), periods of effective and assimilated work; some periods (e.g. studies) can be regularised after payment of contributions.
• Maximum amount: only earnings up to a maximum amount of EUR 60,026.75 (2021) are considered in benefit calculation.
• Minimum amount: there are two types of minimum that are simultaneously and alternatively applicable to the normal pension calculation: a ‘minimum pension’ for a full career and a ‘minimum entitlement’ per career year (if the basis of calculation is lower than the minimum wage for that year).

Benefit calculation

• Calculated on the basis of three elements: the length of the career, the annual salary indexed, and the family status of the person concerned (single and family status, i.e. whose spouses have terminated all non-authorised employment).
• Adjustments: earnings used for the calculation of the pensions are adjusted; yearly adjustment of pensions on the basis of the consumption prices (at irregular intervals also revaluation according to decision from the government).

Taxation and social security contributions

• Progressive levy on the overall retirement income (statutory and supplementary pension) and a levy for health care.
• In principle taxable in the personal income tax (exception made for victims of world wars).