Employee Benefits
AG EB ONLINE
Published on 10/08/2018
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Voluntary Supplementary Pension for Salaried Employees
On 20 July, the Council of Ministers passed a draft bill giving employees the opportunity to build up occupational pensions. The aim is clearly also to boost participation in second pillar pension plans in Belgium, in a move to generalisation.
Under this draft legislation, all salaried employees will be given the option to enroll in a Voluntary Supplementary Pension for Salaried Employees. Contributions will, be capped at 3% of the reference salary (1), less any supplementary pension rights that have already been acquired for the period in question.
To calculate their maximum annual contribution amount, employees will need to check their reference salary as well as their accrued supplementary pension benefits.
As employees will only find out the size of their pension plan reserves on 1 January of a given year at the end of the year, the applicable reference period will always be two years prior (relative to the year in question), both for supplementary pension rights and the salary.
What steps will employees need to take?
It's up to each employee to set their contribution amount within the limits set by law. They also choose the pension institution and the supplementary pension product from among the available options.
What will employers have to do?
Employers will need to withhold the contribution from their employee's net salary and pay it into the employee's selected pension plan with a pension institution.
Unresolved issues
For now, the only information we have is a press release describing some of the provisions of the proposed legislation. As the details are incomplete, there are a number of grey areas such as:
- Will there be a process or method to help employees calculate their maximum contribution amount?
- Will the employer's role be limited to simply withholding the contribution from the net salary?
- How will these contributions be taxed? What about the 80% rule?
Even if one of the aims of this bill is to cut down on paperwork for employers, considerable time and effort will probably still need to be invested to manage the various individual options and withhold contributions from salary payments.
A contribution of at least 3% to their own supplementary pension scheme may prove to be an effective solution.
We will surely be revisiting this subject later, as soon as additional information becomes available.
(1) The 3% cap may subsequently be modified by Royal Decree.
