Pension reform: a central plank in the federal government agreement

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How are you planning to reform the state pension system?

You won't be surprised to hear that my first point of reference for these reforms is the new federal government agreement, which sets out a range of priorities and initiatives. Strengthening the state pension system is one of them. And that's absolutely right, since the statutory pension is a key part of the intergenerational contract and the cornerstone of our pension policy.

I'm also a firm believer in engaging with unions and management. Engagement is vital to shaping sound reforms. Another priority will be to preserve accrued entitlements. In the past, we've seen a complete breakdown in trust with unions, workers and management. I want to put that right. ​

Can you explain how the proposed reforms to the state pension system will be funded?

Pension funding was one of the key discussion points in negotiations on the federal government agreement, which is based on a €2 billion budget for pensions and low-income benefits, and a further €2 billion for healthcare. These figures aren't up for discussion, since the budgets are guaranteed until 2024 under the programme law.

The government agreement also includes a wellbeing package, which will raise the minimum pension by between 1.7% and 2%. So to sum up, the reforms will be paid for through the wellbeing package and the budget, which was released as part of the government agreement. ​​

When referring to these reforms, you've talked at length about the gender pension gap. What exactly do you mean?

Throughout this process, one of my priorities has been to narrow the gender pension gap. We know that people shift from full-time to part-time working at various points in their lives. But it's wrong to say that working part-time is always a conscious choice. Sometimes people – especially women – reduce their working hours or take a career break out of necessity, for instance to raise their children. But do they realise that decisions like these can have serious implications for their pension entitlements? I'm not sure.

One of the practical measures I'm working on is pension splitting, which is also included in the government agreement. The idea is to make the pension system fairer in circumstances where one partner takes a career break or where a couple divorces. That's why pension splitting will be the headline measure of these reforms.

What timeframe are we talking about with these state pension reforms?

The minimum pension has already been raised, which I'm delighted about.

There certainly won't be a Big Bang, not least given the social and economic crisis we're currently experiencing. We know what we want to do, but it takes time to make the right decisions. And if we look at France and Germany, they aren't planning any sudden upheavals either. I think it's best to take things one step at a time while sticking to the terms of the government agreement. Likewise, a slower approach is more consistent with our engagement model. ​

What reforms do you have planned for supplementary pensions?

To my mind, we should be focusing on statutory pensions. As its name suggests, the second-pillar scheme is supplementary. In no way does it serve as a financial safety net in retirement.

The fact that more and more employees are paying into supplementary pensions should give us pause for thought. In my view, the supplementary pension system should be effective, sustainable, transparent, above-board and – crucially – fairly distributed. The government invests substantial amounts of public money in the second-pillar scheme, yet a large portion of taxpayers get next to nothing back while a small minority use it as a way to reduce their tax bill. This situation is simply unacceptable.

How do you intend to make the system fairer?

Unions and management will be discussing ways to make the supplementary pension system fairer in the coming months.

Personally, I think one answer would be to abolish relief on social security contributions above the maximum pension threshold. We need to find new ways to make supplementary pensions a more attractive prospect. One measure that's included in the government agreement is to work towards raising the minimum contribution to 3%.​

Discussions on bringing in a uniform, standardised minimum contribution of 3% seem tense right now. Do you see a way out of the impasse?

It's true to say that the situation is less than ideal. But I believe the current tensions will soon ease now that a government agreement has been reached. 

There are some proposals on the table but, in the end, it's up to unions and management to give their view on the 3% contribution. Is 2021 the right time to be holding these discussions? I'm not certain. But either way, I very much support the ambition.​

The government wants to encourage insurance companies and pension funds to invest supplementary pension reserves in the Belgian economy. How can you make sure this money actually flows into our economy?

This is something I've already raised with the industry body, Assuralia. We want firms to invest responsibly in the real economy. But we also have to be cautious. Transparency is key here. We cannot have workers' money being invested in sectors or activities that are harmful to people's health or that run counter to our social values. For instance, we'd rather see the money going to renewable energy projects than into fossil fuels. Taxpayer confidence relies on us being open about what we're investing in.

The government agreement mentions cutting red tape in the supplementary pension system. What ideas do you have for reducing costs?

I'll be asking the Financial Services and Markets Authority (FSMA)​​ to see where we can make efficiency savings for the supplementary pension and individual savings plan systems.

But I'm not naive. I understand that there's a lot of red tape precisely because our pension system is so complex. Unions and management are working hard on that front. As politicians, it's our job to see how we can simplify the law on supplementary pensions.

What specific aspects of the law do you think need simplifying?

Our plan is to look at every piece of legislation objectively to see what we can discard. So I've asked Sigedis to explore where the law can be simplified, and to shift to more electronic and automated procedures, which will help to slash administrative costs. Once again, this is very much a joint effort. ​

One final question: do you envisage being able to complete all the proposed pension reforms within the three-year parliamentary term?

Like I said earlier, there won't be a Big Bang. I'm pushing hard to drive through some of the reforms in this parliamentary term because that's what the government agreement requires. But many of the measures we're taking now will come into effect between 2024 and 2030. Trying to do everything in this term would lead to corner-cutting and strained relationships. Instead, we prefer to lay the groundwork now so the reforms can happen gradually over time. Once again, it's a question of engaging meaningfully with our partners.​

On 24 February 2021, the Flemish press reported that Karine Lalieux, Minister for Pensions, intends to have the beneficiaries of a supplementary pension contribute to raising the minimum pension. We contacted Ms Lalieux’s cabinet and they denied that such comments were ever made: “There is no link whatsoever between raising the minimum pension and reforming the second pillar pension system. I can assure you that one will not be financed by the other.”

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