Amended employer social security contributions on bridge pensions
Traditionally, a number of legislative changes enter into force every 1 January. In recent years, it has also become somewhat of a tradition to amend the legislation on the regime of unemployment with company allowance (previously called bridge pension). Having regard to the government’s policy of making early retirement more difficult or less interesting, this generally concerned changes making access to the regime more difficult or making the regime less appealing from a financial point of view.
One of the changes concerns the employer social security contribution due on the company allowance, which was modified by the Programme Law of 25 December 2016 (the Law was indeed enacted on Christmas Day). The following contributions now apply if the termination of the employment contract took place after 31 October 2016 and the regime of unemployment with company allowance starts after 31 December 2016:
|Age at the start of the regime||New contribution||Previous contribution|
|Up to 54 (included)||142.5 %||118.75%|
|55 to 57 (included)||75%||62.5%|
|58 or 59||75%||62.5%|
|60 or 61||37.5%||31.25%|
|62 or older||31.5%||31.25%|
The age to be taken into account is the age at the start of the regime of unemployment with company allowance. The percentage of the contribution remains thus the same during the whole regime, irrespective of how gradually the person approaches the age of 65.
The abovementioned percentage applies to the for-profit sector. Different, substantially lower, percentages apply to the not-for-profit sector.
The Law of 27 December 2006 stipulates the possibility of introducing different contributions by Royal Decree during the period a company is recognised by the federal Ministry of Labour as a company that is in difficulties or facing restructuring. A Royal Decree of 29 March 2010 made use of these possibilities and stipulates the following contributions:
|Age at the start of the regime||Company in restructuring||Company in difficulties|
|50 or 51||93.75%||21.88%|
|52 to 54 (included)||75%||16.88%|
|55 to 57 (included)||50%||12.5%|
|58 or 59||50%||8.13%|
|60 or 61||25%||4.38%|
|62 or older||25%||4.38%|
These contributions nevertheless only apply during the period a company is recognised as undergoing difficulties or restructuring. Bearing in mind this recognition can at most be granted for a 2-year period, there is generally also a 6-month period covered by the integration indemnity (and sometimes also the period covered by the complementary indemnity in lieu of notice), and the period of recognition generally retroactively starts at the moment the collective dismissal procedure was initiated, these specific contributions at most apply during a very limited number of months.
The government announced its intention to modify these specific contributions during the period of recognition as company in difficulties or company in restructuring. At the time this article was written, no Royal Decree amending this Royal Decree of 29 March 2010 was published in the Official Journal.
Employers should thus bear in mind that the employer social security contribution on bridge pension indemnities have repeatedly been increased in the past, and it could very well be that they will again be increased in the future. These increases nevertheless often apply to situations where the employer could at the time of the dismissal not know the precise contributions that will apply. The amendment introduced by the Programme Law of 25 December 2016 apply for instance to a dismissal which took place at the beginning of November 2016.