The government of Belgium passed a law introducing voluntary supplementary pensions for employees (VAPW). The new regulation gives employees the right to make payroll contributions to an individual supplementary pension plan with a provider of their choice if they do not currently have access to an occupational plan with total contributions equal to at least 3 percent of their reference salary. The law was published on 27 December 2018 and entered into force on 27 March 2019.
Employees who do not have a supplementary pension plan at the industry or company level, or whose supplementary pension accrual is lower than 3 percent of their pensionable salary, are eligible to take advantage of the VAPW. The VAPW will be funded through salary deductions, and the policyholder is the employee, not the employer. Contributions to the VAPW are deducted by the employer from the employee’s net salary and transferred to the employee’s designated pension provider. Therefore, there are no tax or social security implications for the employer.
Employees need to decide on the following:
- If they wish to build up a supplementary pension within VAPW rules.
- The level of contributions they wish to make (within the ceiling of what is permitted).
- The type of savings product (e.g., branch 21 or branch 23).
- The pension provider of their choice.
Employees who wish to take advantage of the VAPW must notify the employer two months in advance so the employer can take the necessary steps to organize the deductions from the employee’s net salary. Employees should also give the employer two months’ notice if they wish to make any contribution or provider changes or if they wish to terminate the plan. Employees may only notify a maximum of two changes each calendar year.
Level of contributions
Employees are limited in the amount they can contribute to the VAPW contract. The maximum amount is currently limited to 3 percent of the reference salary, or to EUR 1,600 when 3 percent of the reference salary is less than EUR 1,600. The reference salary is based on the total gross remuneration, subject to the social security contributions the employee received two years prior to the pension accrual.
The contribution rate to the VAPW for employees who already have a supplementary pension plan at either the industry or company level will be calculated based on the accrual of that plan.
Impact on employers
The employer’s role is administrative and limited to retaining and passing on the contributions to the pension provider. To reduce the administrative burden, employers can opt to sign a framework agreement with an individual pension provider, under which individual contracts can then be created. There is no obligation for the employer to do so, nor may the employee be required to work within the framework agreement. The employee may choose to use a different pension provider at any time.