What is a complementary pension?

Belgium's pension landscape

Your pension is a hot topic and barely a day goes by without news about pensions appearing in the media. The state pension faces some formidable challenges. The increasing ageing of the Belgian population has already resulted in politicians making some changes designed to keep people at work longer so that everyone can enjoy a decent pension after retirement.
The three pillars
Complementary pension
A complementary pension is a savings pot that you accrue during your working life with the help of your employer or sector.

Today the state pension is by no means the only way of safeguarding your financial future after your working life. For some time, the complementary pension provided by your employer or sector has secured a fully-fledged place in the pension landscape. But that's not all...
The pension system in Belgium consists of three pillars that supplement each other. Together, they represent your total pension:

  • The first pillar, or the state pension
    This is the retirement pension you receive from the government. The amount you ultimately get will depend on your past professional career (status, duration, pay packet, etc.), and on your family situation.
  • The second pillar, or the complementary pension
    This is the extra pension that you accrue via your employer or the sector in which you work. You get this on top of your state pension.
  • The third pillar, or the individual complementary pension
    Besides the state pension and complementary pension, more and more people are choosing to save individually for something extra after they retire. The most well-known ways of doing this are pension savings and long-term savings, and they offer you considerable tax relief.

These pages look mainly at the second pillar.

A complementary pension: what is it and why is it so popular?

A complementary pension is a savings pot that you accrue during your working life with the help of your employer or sector. When you retire, you will receive the accrued amount, on top of your state pension from the government.

Roughly 75% of all employers build up a complementary pension for their employees. There are good reasons why they do this: 

  • Belgium's state pension is among the lowest in Europe, so a little extra is always welcome.
  • With a complementary pension, your employer protects the purchasing power of you and your family after you retire.
  • Besides building up a complementary pension for you, your employer may also provide additional benefits such as death cover. This means the beneficiaries named in your contract will receive a lump sum if you die before retirement. Your employer will thus also protect your family.
  • A complementary pension is a method of remuneration with tax advantages, both for you and your employer. You will have more left in your pocket.

 

How is a complementary pension accrued? 

The organiser of a complementary pension – i.e. your employer or the sector in which you work – will arrange the complementary pension and offer it to you and to your colleagues. This is called a company plan or sector plan. Your employer or sector will build up the complementary pension plan on a monthly or annual basis by paying contributions. In some cases, you may also pay contributions personally. Your employer will take out the complementary pension plan with a pension institution. This might be an insurance company (group insurance), or the employer may manage the plan itself (pension fund).

The contributions will be invested and yield a return. In this way, your complementary pension capital will increase all the time.

Complementary pension
Roughly 75% of all employers build up a complementary pension for their employees.
Administration and payment of your complementary pension
Complementary pension
On My Global Benefits you get a personalised view on your complementary pension.

How will the complementary pension be managed?

Your employer is under obligation to remit the contributions to a pension institution that manages the saved capital and pays it out to you on your retirement. Management of your complementary pension by a pension institution guarantees that your carefully accrued savings will not be lost if your employer is taken over, finds itself in financial problems or goes bankrupt.

How will a complementary pension be paid out?

The complementary pension will be paid out to you when you retire from work. Depending on your pension plan, you will receive the accrued amount after retirement either as a lump sum (the capital will be paid out) or as an annuity.
You can read here everything about the pay out of your complementary pension and the pros and cons of a lump sum or annuity.

Two important documents: the benefits statement and the pension regulations

  •  Each year you will receive a benefits statement that shows you information like the total amount accrued to date (i.e. your accrued benefits), the amount you will receive when you retire, and also what your beneficiaries will receive if you die before retirement age.
    A benefits statement is not always easy to read, so you will find some useful explanatory notes here
  • Your pension regulations contain the rules applicable to your complementary pension. They include who is eligible to join the plan, who pays the contributions and when you will receive your complementary pension. You can obtain a copy of the pension regulations from your present or previous employer and from your pension institution. It is definitely a document worth reading, if only to get a better picture of what you can expect after your retirement.


My Global Benefits: your personal pension information

Want more clarity about your personal situation? Log on to My Global Benefits. This gives you a complete overview of your complementary pension, how much you have accrued to date, what you will receive on retirement and the entitlements of your beneficiaries should you pass away before you retire. My Global Benefits also allows you to consult your benefits statement digitally.