The Belgian government last night reached agreement on major reforms to pensions. What does the accord mean for you?
One of the key points in the pension reforms involves the bonus-malus system, through which the government wants to ‘strengthen the link between working and retirement.’
A bonus-malus system is the link between pension rights – how much retirement pension you will receive – and the history of your career. It is intended to encourage responsible behaviour and discourage the opposite.
The bonus-malus system has been approved in a first reading. Under the agreement pensions will be lower for people who retire before they are 66 and will be increased for every year worked after 66. The penalty will be calculated on the basis of the fewer number of years worked.
Anyone who retires after the statutory retirement age will receive a pension bonus. For people already close to retirement, that bonus will be 2 per cent for every additional year worked beyond the age of 66. From 2030, this will be increased to 4 per cent, from 2035 to 5 per cent.
The pension of workers who retire before they are 66 without having worked enough years will be reduced by similar percentages. The malus does not apply to those who have worked at least half-time for 35 years and can show 7,020 days worked.
The malus only applies to those who retire early. To do so, you must have a career of at least 42 years. So, if you want to avoid the malus, those career years must include at least 35 years of half-time work.
Periods of long-term illness (when you are sick for more than 4 weeks) are taken into account when calculating the malus. These periods continue to count as career periods worked. The malus will be ‘mitigated’, but to what extent, that is not clear at the moment. ‘ Sickness periods will partly be taken into account to allow people to be able to retire on early retirement without pension malus,’ the accord says.
Care leave will also be taken into account when calculating the malus. It will continue to count as an equivalent period (or period worked) when calculating pensions. Care leave will count towards reaching the 35 half-time career years worked for early retirement without a malus. By doing so, the government wants to ensure that women ‘are not disproportionately affected by the pension reforms.’
The precise details of the malus will be the subject of further discussions after the summer recess.