What does the future hold for pensions in Belgium?

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What's your take on Minister Karine Lalieux's term of office?

If we take stock of what has been achieved under this government, I can't be very positive. It's all very well talking about reforms, but in reality nothing has been done to guarantee the financial sustainability of pensions and make our pension policy fairer and more coherent. A few changes have been introduced to give more rights to certain categories of people who had incomplete or very short careers, when what should have been done was to take measures that place more value on work. In our view, we have clearly not moved in the right direction and a lot still remains to be done, as our pension system continues to be financially untenable and unfair. Worse still, the situation has deteriorated as a result of the measures adopted under this government (additional expenditure of 0.7 or even 0.9 percentage points of GDP between now and 2070). Belgium will have to justify itself to Europe, because let's not forget that as part of the recovery plan our country committed to reforming pensions... The previous​ government succeeded in taking useful measures that actually had an impact on the financial sustainability of pensions. This one got it all wrong.
 

So, your opinion is overall negative ? 

Yes. Belgium can no longer bury its head in the sand. The next government will definitely have to work hard and set about introducing real pension reform. But we already know how the Belgian political system works. We're bound to find ourselves in a situation where all the parties - except the extremes - are in government, which will once again make it difficult to change things. Equally, this will take time, as the government will not be formed immediately and pensions will therefore be on stand-by. It all promises to be very complex. But this time, I don't think we'll be able to escape Europe's scrutiny and sanctions, and we'll be forced to stop engaging in ostrich politics.

I had hoped that the Vivaldi coalition, with its motley crew, would produce something tangible like the 2020-2040 Commission on Pension Reform did. This commission also represented all the political parties and succeeded in finding a balanced and lasting solution. Unfortunately, on this occasion, this wasn't possible.
 

You talk of "real reforms" to pensions. But Karine Lalieux still got things moving...

There have been zero constructive reforms.
 

There has been a return of the bonus plan, the minimum pension has been raised, etc. We do get the impression that things have happened. 

However, we don't have the same definition of reform. According to the Minister, it's all about improving the rights attached to the smallest pensions. This was her main political hobby horse. But to me, that's not a reform. In any case, it must be agreed that increasing the minimum pension means additional expenditure with the adverse effect of rewarding not working and reducing the incentive to work longer. 

"There have been zero constructive reforms".​

Minister Lalieux has reintroduced the pension bonus which, as we should remember, had been abolished by Minister Bacquelaine due to its cost and inefficiency. Studies showed that the pension bonus only benefited workers who would have continued to work even without the bonus (windfall effect) and that it was therefore a costly and ineffective measure for extending careers. We don't think the effect will be any better this time, even if the bonus is paid in the form of a lump sum. 

In short, these are 'reformettes'... improvements for small pensions. But there has been no in-depth reform of the pension system and policy.
 

What could the Minister have done? What did she miss?

She lacked ambition and political courage in her programme. We need reform to ensure the sustainability of pensions in a context of an ageing population. To achieve this, we need more people in work, and therefore pension policy that is consistent with this objective and that places more value on work than on not working. We need to be able to give workers a clear, unequivocal message. If you work, you will have (significantly) more pension rights than if you do not work. The reform must also restore fairness between pensioners. There are still far too many discrepancies between the various pension schemes (employees, civil servants and the self-employed) that are no longer justifiable. We need to correct these differences and ensure that the same work generates the same pension rights, whatever the status. Increasing the value of work through pensions, rethinking, reflecting on and harmonising the various pension schemes, or working more on the notion of career length with the introduction of actuarial corrections to allow people to choose; these are all elements of a truly useful reform.
 

So the new government has to start from scratch when it comes to pensions?

Honestly, as nothing has been done under this government, we need to go back to the drawing board and talk about the real problems, such as the inconsistencies between the various pension schemes. In any case, this new government cannot carry on where the previous one left off.
 

What about the second pillar of pensions? This was a real issue with Minister Lalieux... 

Some have clearly tried to "kill" the second pillar, explaining that it was the root of all evil when it comes to pension deficits. Except that the second pillar must absolutely not be touched. It should even be encouraged. And we need it more than ever, because the first pillar will never be able to offer us an adequate replacement rate. What's more, if we want to restore balance between schemes, the 2^nd pillar plays a crucial role in trying to get closer to the replacement rate enjoyed by civil servants. 

"The reform must also restore fairness between pensioners".

Finally, it is still the best tool for guaranteeing a strong link between pension and work. Fortunately, taxation of the 2^nd pillar has not been touched (at the behest of the social partners). Unfortunately, we're constantly making this subject more complex, which isn't very good either.
 

What do you think the new government is going to do about pensions?

I hope that they will ask themselves the right questions and identify where the problem lies. In my view, we need to increase the value of work. Pensions policy must support employment policy. Everyone is convinced that we need to get more people into work, so pensions must allow people to work longer. We are in no way asking for changes to the pensions of those about to retire or those who have made a good start to their career. But for the younger generations, we really need to look at a new system that is fairer and moves towards greater harmonisation between pension schemes, because the current system is not fair, whether between different schemes or between generations. But I have the impression that a single term of office won't be enough time to put this in place.
 

To change the subject to one that is always of interest to our readers: 500,000 people on long-term sick leave in Belgium... what's going on? 

I think that before launching new measures, we need to understand the situation a little and compare ourselves with other countries. 500,000 people on long-term sick leave in Belgium is a huge number. Time needs to be taken to identify the different causes and remedies. A person suffering from cancer should not receive the same monitoring as someone suffering from burn-out. Both categories obviously deserve our full attention, but the remedies and approaches will be different. We also need to distinguish between what the employer can resolve and what depends on the private sphere, and then come up with measures.
 

What could the employer do better to encourage people to return to work? 

First of all, we need a paradigm shift and to stop blaming employers for everything. Companies have been taking steps for a long time to make working conditions less strenuous. What can they do? Continue to adapt workstations where possible. Continue to take preventive measures. But they're already doing a lot. Add to that the multitude of holidays, remote working, more flexible working hours, new working environments, etc., and I'd even go so far as to say that we've never done so much for the well-being of workers, and yet there have never been so many sick days taken for burn-out, bore-out, etc.

"We have to accept that every choice involves discomfort and that life is therefore a package made up."

There is a three-way responsibility in this area: the employer must be able to detect warning signs and react where possible. The employer probably also needs help with this difficult exercise... But the employer is not the only party involved. Doctors and sickness funds must also play their part in ensuring that incapacity for work does not drag on and that the employee is encouraged to return to work as soon as possible. Finally, workers themselves have a major responsibility in the return-to-work process. They have to take responsibility and, in some cases, learn to reintegrate work into their lives and appreciate its value. As individuals, we have to accept that every choice involves discomfort and that life is therefore a package made up of good and not-so-good parts.
 

My solution ?

I think we need to act more quickly and prevent people from disappearing off the radar. There should be activation procedures in the same way as there are for the unemployed, with a clear distinction made between causes of illness. It makes no sense to encourage an employee who is in chemotherapy back into work, but for other illnesses, it might be essential. Once again, I think the conclusion is that we need to place more value on work. And help employers rather than punish them, because ultimately they are also the victims of long-term absenteeism. They are already doing an enormous amount with, as I said, all the preventive measures, new technologies, flexibility and remote working. Any employer who can do something to improve the well-being of their employees does so.