Belgian government agrees on pension reform to receive EU recovery funds

The Belgian government agreed on pension reform on Monday, paving the way for the long-awaited release of part of the EU recovery funds the European Commission had tied to the reform.

On Monday, Prime Minister Alexander De Croo (Open VLD/Renew Europe) and Pensions Minister Karine Lalieux (PS/S&D) announced the long-awaited agreement on Twitter, which completes the one reached a year ago and aims to ensure the pension system’s financial sustainability amid an ageing population.

According to the government, various measures will reduce the cost of ageing by 0.5% of GDP by 2070 (amounting to €3 billion) while increasing the minimum pension.

In May, the Commission invited Belgium to be “cautious” when deciding on better coping with an ageing population and pointed to what it saw as a lack of significant compensatory budgetary measures, the Belga press agency recalled.

Late on Monday morning, De Croo held a press conference with Lalieux and the Liberal Deputy Prime Minister for the Middle Classes and the Self-Employed, David Clarinval (MR/Renew), during which they emphasised the balanced nature of the agreement.

“We are increasing minimum pensions, and this was really necessary, for example, for the self-employed,” De Croo told LN24 after the conference.

The prime minister was also optimistic about the European Commission’s forthcoming opinion on the pension system’s financial sustainability, the reform of which had been linked to the payment of the EU recovery plan to Belgium.

“This is a response to Europe’s expectations,” explained Clarinval, adding that “important elements were expected [by the EU]” and that he believes this agreement provides “a credible and serious response” to the concerns previously voiced.

One of the key measures includes the “progressive pensions bonus”, which is to be paid in net rather than gross terms, which will increase with the time spent working, reaching a maximum of €22,645 three years after the theoretical early retirement date. This measure should encourage older workers to remain active.

Under the deal, these workers can also request a one-off payment of the total amount of the bonus, which according to Lalieux, is “a much greater incentive for people.”

This would also likely raise the life expectancy as workers can “benefit directly” from their efforts, the minister added. In addition, for people with a lengthy career, the amount of €22,645 could be topped up.

Monday’s agreement also confirms the 20 years (instead of 10) of effective career required to receive the minimum pension.

As Lalieux also pointed out, the definition of “effective work” was likely to be detrimental to women, who generally have shorter and more fragmented careers.

New periods will be considered as work to better protect women, particularly when it comes to temporary unemployment, maternity and paternity leaves, adoption leave, and preventative leave from work.

In addition, the revaluation of the minimum pension, which had been reduced by a few euros a month in March, has been confirmed. This measure will result in annual savings of €126 million.

The agreement also aims to get the highest pensions to contribute by doubling the special social security contribution for complementary pensions set up by companies for their executives (Wijninckx), rising from 3% to 6% from 2028.

On top of that, “solidarity between high and low pensions has been strengthened. This was essential,” the minister said.

Last but not least, cuts will be implemented to the mechanism by which civil servants’ pensions rise along with workers’ salaries.

While the majority is satisfied, the opposition expressed concerns.

Belgian Labour Party (PTB) President Raoul Hedebouw believes the agreement does not go far enough on social issues.

“No decision to tax the super-rich, no decision for hard jobs, everyone [will] work until 67. But [there is] an agreement to save three billion on pensions,” he tweeted.

The leader of Les Engagés (European People’s Party) group in the House of Representatives, Catherine Fonck, wrote that the agreement did not seem to make it possible to “better value effort and work”.

According to her, the “very attractive pension bonus […] risks concerning very few people”. She also criticised the agreement for being too “vague”.

For the President of the centrist DéFI party, François De Smet, the agreement comes with positive elements but is merely “a corrective […] to the July 2022 reform, which was deemed unsustainable” by the EU. He also doubts that the effort will be sufficient, as he is not certain “that the European Commission will swallow the pill”.

Flemish nationalist MP Wim Van der Donckt (N-VA/ECR) sees the agreement as “a convulsion of a government that is no longer able to make reforms”, while the party’s leader Bart De Wever called the plan an “outright attack on the pension security of future generations”.

(Anne-Sophie Gayet | EURACTIV.com)