Legislative Changes to Supplementary Pension Plans in Belgium
On June 1, 2024, a significant change was announced regarding the legal minimum return on supplementary pension plans in Belgium. This update is crucial for employers to understand and there are two key points. First, the new legal minimum return rate has been set at 2.50%, effective January 1, 2025. Second, the calculation method uses a rate set at 85% of the average 10-year Belgian Linear Bond (OLO) over the past 24 months.
Impact on Different Pension Plans
Branch 21 Pension Plans (Individually Managed)
- The new rate applies only to premiums paid after January 1, 2025.
- Existing funds (accumulated up to December 31, 2024) will continue to yield the current minimum return of 1.75%.
- This approach is known as the ‘horizontal method.’
Branch 23 Pension Plans (Fully or Partially Invested)
- The new 2.50% rate will apply to both existing funds and new premiums from January 1, 2025.
- This ‘vertical method’ is similar to how a savings account operates.
Important Considerations
- Limited Scope: To manage expectations, it’s important to communicate to employers the limited applicability of this new guarantee. Every Belgian employer should talk to their broker to check their current situation to avoid an additional bill should a shortfall occur.
- Conversion to Annuity: This legal minimum return is also used when converting pension capital to an annuity at retirement, following the WAP (Law on Supplementary Pensions) rate.
This change aims to ensure fair returns for employees while maintaining the sustainability of pension schemes. Brokers should be prepared to address questions from their clients regarding these changes and their long-term impact on retirement benefits.
This information about supplementary pension plans in Belgium is provided by Van Dessel, Asinta’s Partner in Belgium. If you need support with your employee benefits in Belgium, please contact Asinta, and we will put you in touch with Van Dessel’s local experts.