Posted by In the past, the topic of pension has always been a blind spot for me. I feel that I am still young and it is too far to discuss retirement. However, in recent years, there have been a lot of topics about financial issues when people go for retirement. I really feel that the quality of life after retirement is even more important than when having an active income!
Today I will talk about the bits and pieces of the Belgian retirement system and some of the issues that foreign workers will be concerned about.
The source of your income after retirement can come from the following 4 pillars:
- From the Belgian National Pension-State pension/ Legal pension/ Social Security
- Group insurance provided by the employer-Group insurance/complementary pension
- A private pension with a tax refund of up to 30% that you bought from the bank-pension saving, pensionsparen
- Your own savings
Today, let’s talk about the Belgian state pensions, in the upcoming weeks, there will be a few more articles to explain the others in detail, stay tuned!
The Belgian State Pension
In my previous blog article, I wrote about how to read the Belgian payroll, from where we know that13.07% of the brut salary of each Belgian white-collar (non-self-employed) is deducted and deposited into the Belgian social security fund. Social security is not only used for the existing social benefits such as health insurance but also used for the current pension of the elderly.
Although our retirement pension comes from the contribution of the next generation, the national pension that everyone can receive is related to the social security that you pay every month during your working period. If your salary is high and working years are long, then you can receive more state pensions.
The Belgian government has given you an estimate of your future pension based on your current payment status. Let’s go to the “My Pension” website to take a look!
First of all, I suggest you set up Itsme, with your Belgian phone number, you can use Itsme to log in to almost all government websites.
Log in to the website mentioned above, click on My legal Pension, and you can see that the government has already estimated a retirement net amount for you.
Obviously, this number varies from person to person. It is based on the amount of social security you paid in the past and also your current contributions, then derived by assuming that you continue to pay the same social security at your current salary until your retirement age. In theory, your salary will rise with experience accumulation, thus this number will rise accordingly, but if you become self-employed one day or become unemployed, this number will also be adjusted accordingly.
Let’s look at a set of average figures, the average monthly amount of the national pension in Belgium is €1,100 for employees, €2,600 for government employees, and €900 per month for self-employed people[3].
In 2021, the Belgian Federal Pension Service also introduced some measures to update it [4], for example, any full-time worker will receive a minimum of 1,500 monthly pensions after 2024. The valuation of My Pension website has also been adjusted accordingly.
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Is this pension estimation reliable?
Although the retirement fund is not as high as during the employment, for me, judging from the current situation, there is no problem for basic living. I had some doubt on whether this figure was reliable before, after asking around and doing some further research, I found it rather reliable.
All your past income records (as long as you are not illegal workers) have all been counted by the Belgian government. After reading my work record, I was surprised. All the weekend job or bits and pieces helping the school as a student has all been recorded in Belgian system!
If you are interested in your past work experience and income, you can go to the website of the Belgian government “My Career” to have a look at [5].
Every time you change jobs, the system keeps a record. Every year, all pre-tax income after social security is excluded is also counted in the system!
Can you rely on state pension for retirement?
When you are retiring, if the government offers you 1,500 Euros per month (for example), as a net income (no tax), additionally, assuming at that time, there is no need to pay the mortgage or additional cost for children. Judging from the current power of purchase on Euro and also the price of living, it is enough to live.
The reason why I doubted whether this figure is reliable before is that I think if the employees can live by relying on the government to provide for the elderly, can the young people just spend everything they earn?
There are 3 items that we haven’t considered when getting the above conclusion:
- Is the value of 1,500 euros after 30 or 40 years the same as today? Most people already know the concept about time value of money[6]. Even if you only consider the most basic concept of inflation, 1 euro today will always have more purchasing power than 1 euro a year later. With this in mind, 1,500 euros 40 years later, it is very likely that we will not be able to maintain our current quality of life.
- As you grow older, your consumption will not be limited to food, clothing, housing and transportation, instead, your medical expenses will increase. If one day you are unable to live alone and go to a nursing home, then 1,500 euros is not enough. According to the VRT news in 2016, the average expenditure of Belgian nursing homes is 1,600 euros per month [7].
- From the perspective of the macro social structure, according to the official statistics of Belgium in 2020, the elderly in Belgium over 65 years old are close to 19% of the total population[8]. World population statistics data in 2021 show that the current average age in Belgium is 41.9 years old, and about one-third of the population is already or is moving towards retirement [9].
I am relatively pessimistic. Even if the pension promised to us by the Belgian government is a certain number, it does not mean that it will not adjust with changes in the social and economic structure or extend the retirement age.
So my conclusion is that we cannot merely count on the government to finance us when we retire. This is why we all need to look at the 2-4 retirement pillars and how to deal with financial investment. I will write more blog posts concerning those topics in the future. Please subscribe!
If I work in another country upon retirement, how do I receive the Belgian state pension?
Finally, let’s talk about a topic that most ex-pats in Belgium are concerned about. If they return to the country (or go to work elsewhere), how do they receive the Belgian national pension?
1. The systems of the European Economic Area (EEA)[11] are interlinked
If you work in a country in the European Economic Area (EEA) when you retire, or worked in other EEA countries during your career, then the procedure is rather simple. Because the EEA pension offices communicate to each other, when you go to your last worked EEA country to receive your pension, they will automatically notify those other countries to which you have paid social security contributions. They will ask those countries to prepare your pension and transfer the money, so that you don’t have to go to different pension offices, and you can receive the pensions saved in all EEA countries in the same country. [12].
Such EU policies also provide other conveniences for those working in the EEA. For example, the German stipulation is that you have to contribute social security for at least five years to be able to receive a pension. But thanks to the EU policy, as soon as you have worked in the EEA for more than 5 years, you can receive a corresponding pension (proportion to your working year) in Germany!
The EU’s advice is that when you are about to retire, you should apply to the local government 6 months in advance, because gathering pensions from different countries is a relatively complicated internal process.
2. Countries that have bilateral agreements with Belgium [13]
Some countries have bilateral agreements on social security benefits with Belgium, such as Japan, South Korea, US, Canada, etc. This means that the time you work in those countries (even if it is not enough for the local minimum social security time) can also be included in the pension calculation, and vice versa. If you are in one of the following countries after retirement and want to receive a Belgian pension, you can apply directly at the local pension office and they will contact the Belgian pension office.
3. Other countries (including China, India and others)
If you finally decide to go to your country such as China, India, or others and your retire there, as those countries do not have a bilateral social security agreement with Belgium, then you have to apply to the Belgian Pension Office for the Belgian national pension yourself, but this must follow the Belgian retirement age. For example, if you retired at the age of 60 in China, you will not be able to apply for the pension that Belgium can give you until you are 65. If you have worked in different EEA countries, then you only need to apply to the last national pension agency before you left the EEA, and they will contact other EEA countries to process your request [14].
Suppose you go to China to work for 5 years, and then return to work in Belgium, and eventually end up in Belgium for retirement. Since the condition for receiving pensions in China is that social security has been paid for at least 15 years[15], and additionally Belgium and China have no bilateral reciprocity agreement, in this case you will not receive Chinese pensions at all after retirement.
Ok this is some basic info about the Belgian state pension, I will publish more articles about the pension topics in the upcoming weeks, please subscribe!
More articles about working in Belgium:
How to read your payslip in Belgium?
How can you spend the 250 euro eco cheques?
Sponsored work opportunity, better than scholarship! – VIE program
Tas refund in Belgium – Optimise your income tax
Health insurance, are you using it to its full potential?
All the paid holidays you might have missed in Belgium
Back to school – working student in Belgium
Fun facts about divorces in Belgium
References
- https://www.youtube.com/watch?v=qgwmtrOCIyk
- https://www.mypension.be/fr/mylegalpension
- Retirement in Belgium
- Belgian Pension reform
- Belgian government – My career.be
- Time value of money
- VRT news
- Population of Belgian by age
- Belgian population
- EEA
- Get state pension abroad
- Social security bilateral agreement with Belgium
- Request for pension
- http://www.china-un.ch/chn/zywjyjh/t168577.htm
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