Time to start planning for your retirement

Even if it’s not currently on your top 10 list of concerns, you should really start thinking about how you want to live out your retirement years. After all, it’s not like you’re going to suddenly slow down once you hit 65: you’ll still want to travel to distant lands, shop for new clothes, buy a fun car to drive, enjoy the pleasures of fine dining with your friends and family…
And you can’t sweep some of the less positive aspects under the rug, either: getting older often goes hand in hand with higher medical costs.

So it’s not a good idea to defy the clock, even if you’re still bringing in an income. Unless you’ve just won the lottery, it’s never too early to start planning and saving for retirement.

Read on and we’ll guide you through the ins and outs of retirement.
The pension system in Belgium
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Many employers help their staff members build up a bigger retirement nest egg by providing a complementary pension.

N.B.: Each pension plan is custom designed to fit your employer's specifications. Some of the covers below may not apply to your plan. For a complete description of the covers included in your plan, contact your Human Resources department.

 

Your state pension: a few quick facts

After years of hard work, it's only natural to want to kick back and enjoy a comfortable retirement. In Belgium, statutory retirement age is currently 65. By 2030, it will be raised to 67.
Early retirement is still an option, although the eligibility requirements are becoming much stricter.

The retirement benefit that you will collect also depends on your years of qualifying service. If you choose to work part-time or take early retirement, it will impact the size of your statutory and complementary pension entitlements. For more information about this, you can, of course, look online, or go to your HR department with any questions.

 

The three-pillar system 

Belgium has pursued a three-pillar approach to retirement income:

  • First pillar (state pension)

    Your state pension or retirement pension is the amount you will collect based on qualifying years of service as an employee or self-employed worker. The amount varies according to different factors and reflects your specific case.

    As you probably already know, this system has been under pressure, notably due to the ageing population. And the sad fact is that Belgian state pensions are not exactly generous to start with. This is what prompted the creation of two additional pillars.

 

  • Second pillar (corporate-sponsored complementary pension)

    A number of employers provide additional retirement savings for their staff through a complementary pension. Every month, they allocate a set contribution to a pension fund or group insurance scheme. Depending on your pension plan, you may also be allowed to make additional contributions yourself.

 

  • Third pillar (individual complementary pension savings plan)

    More and more people are turning towards individual pension savings plans as a way to top up their future retirement income. The most common vehicles are retirement savings plans and long-term savings plans. Both options come with attractive tax incentives to encourage this type of investment. The sooner you get started, the longer you take advantage of the tax deductions.

In the next section, we'll be focusing more specifically on the second pillar. Want to find out more about your state pension (first pillar)? Then be sure to check mypension.be or Sigedis-db2p, two very detailed and comprehensive websites created by the federal government.

Your group insurance plan

Group insurance is one of the best known and most commonly offered fringe benefits. It provides the opportunity to top up your meagre state pension with a complementary pension, available through your employer. Throughout your career, you build up a retirement nest egg through regular employer contributions and – in some companies – through employee contributions as well. When you retire, you cash in on the savings in the form of a lump sum or a monthly annuity, depending on your pension plan. There are positives and negatives to both options, which we've summarised here.

Your pension plan regulations will stipulate the different ways you can cash in on your entitlements as well as the age the supplementary savings can be claimed. The regulations are available from your HR department.

Another important document is your benefits statement. Each year, your group insurance provider will send you a statement which features your gross entitlements if you were to leave your company (= your accrued reserves). It also includes the projected value of your benefits when you reach retirement age.

As benefits statement can be a challenge to understand, we've put together a handy jargon buster to assist you.

If you have a group insurance plan with AG Employee Benefits, you'll receive an e-mail alert to let you know whenever you have a new benefits statement available. Via My Global Benefits, you'll have access to your historical benefits statements with all of your employers, past and present, as long as the plans in question are managed by AG Employee Benefits.

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Through regular contributions, you build up additional retirement savings throughout your career.
Your group insurance plan with death and/or disability coverage
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With death benefit coverage, your beneficiaries will be entitled to collect a certain sum if you pass away before you reach retirement age.

Most group insurance plans also come with death benefit coverage. This means that the beneficiaries designated in your group insurance plan will be entitled to collect a certain sum if you pass away before you reach retirement age. The specific amount will be specified in your pension plan

You are free to choose the beneficiaries yourself. For more information, click here.

Some group insurance plans also include Waiver of Premiums coverage. This means that if you have an accident or illness that leaves you unable to work (= temporary or permanent occupational disability), all future plan premiums will be paid for you. You can therefore rest assured that your hard-earned retirement savings will remain intact if you are too sick or too hurt to work, but also if you've just had a baby.

Have a group insurance plan with AG Employee Benefits? On My Global Benefits, you can easily check whether your plan includes death and/or disability coverage.

 

One last question: you've changed companies. What happens now with the savings you've accrued in your group insurance plan?

Let's start with the most important message: even if you've taken on a new job elsewhere, you still get to keep your group insurance savings. Now that we've set your mind at ease, there are still a few options to select in order to continue to build up your retirement nest egg. To find out more, see our recap: "I've changed companies".

Advance planning for your post-retirement hospital coverage

In addition to a group insurance plan, many employees also have hospitalisation insurance through their employer. While you'll often be given the option to remain enrolled in the plan after you retire, in some cases you may lose your corporate coverage. It's best to check with your HR department to see where you stand. 

If you lose your corporate-sponsored plan, you'll have to take out individual hospitalisation insurance. While you always have the option to sign up for individual continuation coverage, it often comes with a massive hike in your premiums, especially if you're 65 or older. You could, of course, go on your merry way without hospitalisation insurance, but this is not something we can recommend in good conscience. This is because your medical expenses tend to rise significantly once you hit 65, and could quickly take a bite out of your retirement savings. Fortunately, there is a way to neutralise the string of these higher premiums: your employer can sign you up for a "waiting policy" while you're still on the company's payroll. This will lock in your age at the time you sign up, so that when you retire and transition to individual continuation coverage, your insurer will charge you the applicable premium for your locked-in age rather than your actual retirement age. The earlier, the better, as the savings could easily amount to a few hundred euros a year. 

At AG Insurance, this type of insurance is called AG Care Vision. And there's more to AG Care Vision than just keeping your individual continuation premiums low. As soon as you sign up, you'll be entitled to additional benefits on top of your corporate hospital coverage. What's more, you can still sign up for AG Care Vision even if your company's hospital plan is with another insurer.

Want to find out more about AG Care Vision? Check our webpage, download the flyer in French or Dutch or stop by your broker's office.

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You always have the option to keep your hospitalisation insurance by signing up for individual continuation coverage.