Statutory and regulatory framework

Primary laws and regulations

What are the main statutes and regulations relating to pensions and retirement plans?

The Belgian legal framework on occupational pension schemes consists of social protection and prudential protection measures.

Social protection is primarily laid down in the Law of 28 April 2003 on occupational pension plans and the Law’s implementing royal decrees. Other social laws may come into play in the field of pensions, such as, primarily, Law of 3 July 1978 Law on Employment Contracts and the national Collective Bargaining Agreement No. 32-bis (CBA No. 32-bis) on transfers of undertakings (TUPE).

The prudential protection is twofold, depending on the nature of the pension vehicle, which can be an insurance contract or a pension fund.

Insurance companies, which account for roughly two-thirds of the occupational pension assets in Belgium, are primarily subject to the Law of 13 March 2016 on the Status and Supervision of Insurance and Reinsurance Companies and its implementing royal decrees and regulations (which implement the EU solvency directives).

Pension funds, which account for roughly one-third of the occupational pension assets in Belgium, are primarily subject to Law of 27 October 2006 on the supervision of IORP (which implements EU IORP Directive 2003/41) and its implementing royal decrees.

The Belgian legal framework is in line with the applicable EU directives.

Regulatory authorities

What are the primary regulatory authorities and how do they enforce the governing laws?

The Financial Services and Markets Authority (FSMA) supervises compliance with social protections for occupational pensions and the pension funds themselves. Insurance companies are subject to the supervision of the Belgian National Bank.

Both institutions have the power to issue circular letters and communications containing guidance on the practical implementation of the laws and royal decrees. They also have a wide array of sanction mechanisms at their disposal in the case of breaches of applicable laws and regulations, including administrative penalties. They can also submit matters for criminal prosecution.

Pension taxation

What is the framework for taxation of pensions?

Occupational pension plans are subject to a very favourable tax and social security regime, as compared with salaries. Very briefly, instead of the normal social security contributions due on salary (roughly 27 per cent by the employer and 13.07 per cent by the employee), contributions to a pension scheme are subject to a special social security contribution of 8.86 per cent and an insurance tax of 4.4 per cent. There is an additional 3 per cent contribution for certain high pensions.

Upon payout of the pension at retirement, if the pension is taken as a lump sum or capital (which is customary in Belgium), the employee social security contribution is a maximum of 5.55 per cent and the normal tax rate is 16.5 per cent, but it is lowered to 10 per cent if the employee effectively remained professionally active until retirement at age 65.

Annuities, which are much less common in Belgium, can also benefit from a special tax regime.

Pension contributions are tax deductible for employers if they stay within the 80 per cent limit, which means, simply stated, that they should finance an aggregate (statutory and occupational) pension, not exceeding 80 per cent of the employee’s last salary.

State pension provisions


What is the state pension system?

The state pension system is financed by social security contributions paid on salaries. It is a repartitioning system. It grants pension rights based on salaried employment and assimilated days. Pension rights are accrued on gross salary up to a ceiling currently equal to €55,657.47 (in 2018). Salary in excess of that amount does not open any right to a state pension.

The state pension is payable at 65. The normal legal retirement age will be raised to 66 in 2025 and to 67 in 2030. The early retirement age is currently 63 (subject to certain transitional rules, as the minimum age for early retirement has only recently been raised from 60 to 63).

There is a different state pension system for self-employed workers and a (significantly more generous) system for public officers.

Pension calculation

How is the state pension calculated and what factors may cause the pension to be enhanced or reduced?

The normal rule is that a pension is equal to 75 per cent (for a family pension) or 60 per cent (for a single pension) of salary (up to the ceiling) multiplied by service years and divided by 45.


Is the state pension designed to provide a certain level of replacement income to workers who have worked continuously until retirement age?

The calculation formula (see question 5) is designed to grant employees a replacement income of 75 per cent (family) or 60 per cent (single) for a full career of 45 years. As many employees have shorter careers and earn more than the pensionable salary ceiling, the effective replacement rates are a lot lower. The gross pension replacement rate is only about 46.7 per cent, according to Organisation for Economic Co-operation and Development figures for 2016.

Current fiscal climate

Is the state pension system under pressure to reduce benefits or otherwise change its current structure in any way on account of current fiscal realities?

Owing to increasing longevity and demographic realities, the state pension system is under pressure. Over the recent years, subsequent governments focused their measures on increasing the age for early retirement from 60 to 63. In addition, the government raised the retirement age from 65 to 66 by 2025 and to 67 by 2030.

Occupational pension schemes


What are the main types of private pensions and retirement plans that are provided to a broad base of employees?

Occupational pension plans can be defined benefit, cash balance or defined contribution. In recent years, many defined benefit plans have been closed to future participation, since employers prefer the financing predictability of defined contribution schemes.

Occupational pension plans can be established by employers at the company level. There are also industry-wide schemes in certain industry sectors, which are set up by the employers’ organisations and trade unions in those industries. Industry-wide schemes often include opt-outs allowing employers to establish their own scheme, provided it is at least equivalent to the industry scheme.


What restrictions or prohibitions limit an employer’s ability to exclude certain employees from participation in broad-based retirement plans?

Belgium has very strict anti-discrimination laws applying to membership conditions and all other features of occupational pension plans. Every distinction made in an occupational pension plan must be objective, reasonable and proportionate.

In practice, many occupational pension plans still make distinctions between blue-collar, white-collar, and management plans. The Law of 5 May 2014 gradually eliminates distinctions between blue- and white-collar employees. Such distinctions will be prohibited as of 2025, with a standstill obligation as of 2015. Some employers make distinctions based on internal job classification systems or scales, which continue to be permissible.

When plans are changed, employers will often grant employees in service the choice between keeping their current plan or joining the new plan, which will apply to all new hires after the plan introduction date. Similarly, in the context of mergers and acquisitions, the employer will often grant the employees of the acquired company the choice to stay in their (more favourable) plan or to join the plan of the acquirer.

Employees must be immediately affiliated upon hiring and remain affiliated to the plan as long as they remain in the employer’s service, until they retire.

Part-time workers are entitled to pro rata participation in plans.

Can plans require employees to work for a specified period to participate in the plan or become vested in benefits they have accrued?

There are no waiting periods for membership to a plan. Employees immediately become members of the plan upon entry into service, if they have reached the minimum age of 25. Employees under 25 are often affiliated to the plan for death-in-service benefits, with pension accruals starting only at 25.

While previously a vesting period of maximum one year was permitted if explicitly provided in the plan document, as of 1 January 2019, as a result of the implementation in Belgium of the EU Pension Portability Directive 2014/50, vesting must be immediate.

Overseas employees

What are the considerations regarding employees working permanently and temporarily overseas? Are they eligible to join or remain in a plan regulated in your jurisdiction?

The answer to this question depends on how the membership conditions of a plan are drafted. In practice, employees will often remain in the plan when they are temporarily seconded abroad with continued affiliation to the Belgian social security system. Employees who permanently transfer abroad are normally no longer covered. Contributions made for these employees remain tax-deductible in Belgium only if they remain on the Belgian payroll.


Do employer and employees share in the financing of the benefits and are the benefits funded in a trust or other secure vehicle?

Occupational pension plans can, but need not, provide for employee contributions. Employee contributions are financed out of the employee’s net salary and give rise to a tax reduction, but the tax and social security treatments of these contributions is not nearly as favourable as that of employer contributions (see question 3). Having employee contributions can result in increased mandatory worker participation, including a requirement to conclude and change the plan by collective labour agreement or work regulation, as well as joint labour management of the pension fund.

Benefits cannot be financed solely on the employer’s books. The law imposes mandatory externalisation, meaning plans must be funded through an insurance company or a pension fund.

What rules apply to the level at which benefits are funded and what is the process for an employer to determine how much to fund a defined benefit pension plan annually?

Defined benefit plans must be funded in accordance with a financing plan, which must provide for financing at all times of the vested reserves, with an additional buffer on top.

For defined contribution plans, the current law on occupational pensions provides for a mandatory minimum return guarantee on contributions, which, since 1 January 2016, is equal to 1.75 per cent (coming down from 3.25 per cent in 2015). The guarantee is borne by the employer and measured at the time of transfer of the capital (after exit) or retirement. The minimum guarantee rate has been the subject of heavy debate in the current low-yield market. Even though it was lowered to 1.75 per cent in 2015, insurance companies currently do not offer a 1.75 per cent guarantee on insured plans, resulting in potential deficits to be borne by employers.

Level of benefits

What are customary levels of benefits provided to employees participating in private plans?

There are no legal standards regarding contribution levels, so benefits can, therefore, differ significantly. Executive plans can be significantly more generous than broad-based plans. Many pension formulas (both in defined benefit and defined contribution) are step-rate (ie, they will make a distinction for the purpose of occupational pension accrual between a salary below and above the state pensionable salary ceiling - currently €55,657.47). The part below the ceiling will yield less occupational pension, as it only complements the state pension; the part above the ceiling yields more, as there is no state pension accrual. Industry sector plans typically have defined contribution formulas with comparatively low (sometimes extremely low) contribution levels.

Pension escalation

Are there statutory provisions for the increase of pensions in payment and the revaluation of deferred pensions?

Belgium has a tradition of paying occupational pensions in lump sums upon retirement, which is partially due to the favourable tax treatment of lump sums (see question 3).

Payment in annuities is exceptional. Where payments are made in annuities, the rules on increase or escalation are provided in the plan. There are no statutory requirements regarding these rules.

Similarly, the rules on revaluation of deferred pensions must be provided in the plan. The law on occupational pensions only provides that deferred pensions cannot be reduced.

Death benefits

What pre-retirement death benefits are customarily provided to employees’ beneficiaries and are there any mandatory rules with respect to death benefits?

Different formulas are possible for death benefits in occupational pension plans, ranging from payment of the accrued vested reserves to no payment, or payment of the equivalent of a specified number of years’ salary.

There is also a possibility to organise a cafeteria system with a choice of death coverage (eg, zero, one or two years’ salary), and a fallback coverage where no choice is made (eg, one year’s salary is the default).

Since 1 January 2016, the law obliges employers to offer deferred members the option of death coverage on their vested reserves, at members’ expense.


When can employees retire and receive their full plan benefits? How does early retirement affect benefit calculations?

The earliest employees can receive the benefit of an occupational pension plan is the time of retirement, that is, when they start receiving statutory pension benefits, normally at the age of 65 (see question 4). This principle was laid down in the Law of 18 December 2015 and is subject to transitional measures allowing payment of occupational pensions prior to statutory retirement between the ages of 60 and 65 (depending on the plan member’s age in 2016).

The normal rule is that upon early retirement in defined benefit plans, benefits are discounted by the applicable interest rate and mortality tables to calculate vested reserves. Some defined benefit plans have favourable early retirement calculation provisions, such as a flat-rate discount or no discount at all between 60 and 65. These favourable early retirement mechanisms were, however, prohibited and annulled by the same Law of 18 December 2015 (subject to transitional measures for employees aged 55 and older). In defined contribution plans, early retirees will simply receive the amounts credited to their individual account.

Early distribution and loans

Are plans permitted to allow distributions or loans of all or some of the plan benefits to members that are still employed?

No payment is possible before retirement. The law allows advances for the purpose of the acquisition or securitisation of mortgage loans for real estate in the European Union, to the extent that this is expressly permitted in a plan’s rules.

Change of employer or pension scheme

Is the sufficiency of retirement benefits affected greatly if employees change employer while they are accruing benefits?

Defined contribution benefits are not affected by a change of employer, as employees remain entitled to the amount credited to their individual account. In defined benefit plans, there are bound to be pension losses in connection with a change of employer, if employees decide to transfer their vested rights, as future salary increases will no longer be taken into account and vested rights can be calculated with a discount rate, depending on the plan, of up to 6 per cent.

In what circumstances may members transfer their benefits to another pension scheme?

Upon leaving the employer’s service, employees have a choice to keep the reserves in the old employer’s plan (with or without death coverage), transfer the reserves out of the plan to the new employer’s plan or an authorised individual pension arrangement, or leave their reserves in a special insured ‘welcome structure’, where they have a choice of the related death benefit. Employees who leave their reserves in the plan can still transfer them out at a later date. Individual transfers are not possible as long as the employee remains in service.

Investment management

Who is responsible for the investment of plan funds and the sufficiency of investment returns?

Investment of plan funds is the responsibility of the insurer or the pension fund. However, the ultimate liability for the sufficiency of the returns lies with the employer. In a defined benefit plan, the employer is liable for the benefit as provided in the plan rules; in defined contribution plans, the employer is liable for the statutory minimum return guarantee of 1.75 per cent. (See question 13.)

Reduction in force

Can plan benefits be enhanced for certain groups of employees in connection with a voluntary or involuntary reduction in workforce programme?

Enhanced benefits in connection with reduction in workforce programmes will raise tax and discrimination issues. In practice, it used to be the case that employees who were forced to leave a company early, before early retirement age, would receive credit in the pension plan for the missed future service years until the normal retirement age. These benefits have, however, been prohibited and annulled by the Law of 18 December 2015. They remain permissible for employees who were 55 or older on 31 December 2016.

Executive-only plans

Are non-broad-based (eg, executive-only) plans permitted and what types of benefits do they typically provide?

Such plans are permitted (see question 9). They can either be top-hat plans providing for additional benefits on top of broad-based plans applicable to all employees, or separate plans for executives who do not participate in the broad-based plans.

How do the legal requirements for non-broad-based plans differ from the requirements that apply to broad-based plans?

The same legal requirements, and tax and social security regime, apply.

Unionised employees

How do retirement benefits provided to employees in a trade union differ from those provided to non-unionised employees?

Employers cannot discriminate in occupational pension plans (see question 9), so it is not possible to offer different benefits to trade union members. There can be trade union involvement in broad-based plans, in particular where the plans provide for employee contributions (see question 26).

How do the legal requirements for trade-union-sponsored arrangements differ from the requirements that apply to other broad-based arrangements?

Where a plan covers all employees and provides for employee contributions, if the company has a works council or other employee representation body, the plan must be laid down in a collective bargaining agreement concluded with the trade unions. The legal requirements for such plans do not differ from those for plans established unilaterally by employers. Where trade unions have a say, one can expect more employee-friendly provisions in the plan.


Examination for compliance

What is the process for plan regulators to examine a plan for periodic legal compliance?

Plan rules are not subject to advance clearance by the authorities. Plans administered by pension funds are uploaded on an electronic platform allowing access by the FSMA. Pension funds and insurers are required to have their own compliance officers who are expected to periodically monitor the plans. All plans must be made available in a public database of all occupational pension plan data, which the FSMA and the Belgian National Bank, as well as tax and social security authorities, can use for control purposes. The FSMA regularly conducts audits of pension funds. The Belgian National Bank actively supervises insurance companies.


What sanctions will employers face if plans are not legally compliant?

Employers may incur administrative penalties or criminal sanctions. In practice, the main threat comes from civil actions by employees. In the context of (alleged) discrimination cases, employees can try to obtain levelling up to the more favourable treatment.


How can employers correct errors in plan documentation or administration in advance of a review by governing agencies?

Employers can conduct their own review, or rely on actuarial or legal advice, or both. Where the plan covers all employees, plan changes are subject to prior advice from the works council (or other employee representation body). Employee representation bodies must also be consulted on interpretations of the plan.

Disclosure obligations

What disclosures must be provided to the authorities in connection with plan administration?

Pension funds must disclose a series of data relating to plans through an electronic platform allowing access by the FSMA. Data on accrued reserves for each plan participant must be made available in a public database of all occupational pension plan data, which the FSMA and the Belgian National Bank, as well as tax and social security authorities, can use for control purposes.

What disclosures must be provided to plan participants?

Plan participants must receive an annual benefit statement containing a series of mandatory data, including:

  • the amount of the vested reserves,
  • the corresponding benefits at retirement,
  • a projected benefit estimate,
  • the death coverage,
  • the elements used in the calculation of these amounts,
  • the vested reserves of the previous year as well as the current financing level of the reserves, and
  • the mandatory statutory minimum return.

Deferred plan members will only receive this information online through the public second pillar pensions database.

Copies of a plan’s current rules must always remain available upon the request of a plan member.

Enforcement mechanisms

What means are available to plan participants to enforce their rights under pension and retirement plans?

Plan participants can file complaints with the FSMA, which will investigate and impose corrective actions where needed. Alternatively, plan members can sue the employer as well as the pension vehicle (insurer or pension fund) in court.

Plan changes and termination

Rules and restrictions

What restrictions and requirements exist with respect to an employer’s changing the terms of a plan?

Where a plan covers all employees and provides for employee contributions, if the company has a works council or other employee representation body, the plan change must be negotiated with the trade unions to be laid down in a collective bargaining agreement. The same is true if a plan (even though not legally required) was laid down by a collective bargaining agreement.

If there are no employee representation bodies in the company, but the plan still covers all employees and provides for employee contributions, the plan can be changed following a special procedure for work regulation amendments.

Where this is not the case, employers are theoretically free to unilaterally change the terms of the plan. However, pension plans are deemed to be an essential element of the employment relationship, so that material changes may give rise to constructive dismissal claims.

When moving from a defined benefit to a defined contribution plan, the reserves relating to the career under the defined benefit plan must continue to evolve based on future salary increases (and other changes in the plan formula elements); this is the ‘dynamic management’ of defined benefit plans.

What restrictions and requirements exist with respect to an employer terminating a plan?

See question 33. Plan terminations are quite exceptional in Belgium (partly owing to the favourable tax treatment of plans - see question 3).

Insolvency protection

What protections are in place for plan benefits in the event of employer insolvency?

Contributions to the plans that were still owed by the employer at the time of the bankruptcy are subject to a statutory lien on all movable assets, which ranks very high in the privileged creditors’ order. For contributions that remain unpaid, the employee will, under certain circumstances and subject to certain limits, have a claim against the Belgian closure fund.

Other than the above, the insolvency of the employer should not have any impact on the pensions, as the pension assets must be held by the insurer or pension fund.

Business transfer

How are retirement benefits affected if the employer is acquired?

When the employer is acquired in a share deal, there is no impact on the retirement benefits. Where the employer finances the pension plan through a multi-employer pension fund of the group of companies, there may be a need, as a result of the acquisition, for the employer to search for an alternative financing vehicle (pension fund or insurance).

In the case of an asset deal that qualifies as a transfer of an undertaking, employees will automatically transfer to the acquirer with their seniority and remain entitled to the same salary and benefits under CBA No. 32-bis. In Belgium, occupational pensions and other supplementary social security benefits have remained exempted from the scope of these regulations. However, legal scholars have argued that the acquirer must ensure an equivalent level of benefits to avoid constructive dismissal claims. If the acquirer assumes the seller’s pension plan, the exit requirements (see question 20) will not apply.


Upon plan termination, how can any surplus amounts be utilised?

In principle, upon a plan’s termination, surplus amounts are distributed among the plan members. A plan can provide for possible allocation of funds to other pension plans. But the plan assets cannot return to the sponsoring companies. By collective bargaining agreement (or following the procedure for work regulation amendments if there are no employee representation bodies in the company), the surplus can be allocated to another social purpose.

Fiduciary responsibilities

Applicable fiduciaries

Which persons and entities are ‘fiduciaries’?

Belgian pension law does not have a concept of plan ‘fiduciaries’.

Fiduciary duties

What duties apply to fiduciaries?

Where the plan is entrusted to an insurance company, the employer and the plan members have contractual rights against the insurance company under the insurance policy and the plan rules. The same is true where the plan is entrusted to a pension fund. In addition, the directors of the pension fund, as part of their management obligations, are in charge of the proper implementation of the plan, which is the closest equivalent Belgium has to plan fiduciary responsibility in pensions.

Breach of duties

What are the consequences of fiduciaries’ failing to discharge their duties?

Pension fund directors may be held jointly liable for failure to comply with pension laws in implementing the plan.

Legal developments and trends

Legal challenges

Have there been legal challenges when certain types of plans are converted to different types of plan?

In some cases, changes of defined benefit plans to defined contribution plans have been the subject of difficult social negotiations with employee representatives and trade unions. There have been occasional complaints about the plan amendment process with the FSMA, leading companies to amend or redo (part of) their plan amendment process. There have also been individual cases brought before the Labour Court, where plan members have challenged plan changes and invoked discrimination.

Have there been legal challenges to other aspects of plan design and administration?

There have been some (alleged) discrimination cases (see question 9), as well as cases involving interpretation of the plan rules, and often combinations of both.

Future prospects

How will funding shortfalls, changing worker demographics and future legislation be likely to affect private pensions in the future?

The move to defined contribution is still ongoing and seems likely to continue in the context of the required harmonisation of blue-collar and white-collar pension plans. The recent changes in the state pension where the normal and early retirement ages were raised and the recently introduced link between state and occupational pensions (see above) complete the government’s plans to keep employees longer at work.

The National Pension Council, composed of academics in the pension field, proposed a thorough reform of the statutory pension system to move to a pension credit system, with credits accrued over the professional career, the value of which is determined from year to year.

Belgium will hold general elections in May 2019. It remains to be seen who will be in the next government and to what extent pension reform measures will be continued.

Update and trends

Hot topics

Are there any current developments or trends that should be noted?

No updates at this time.