Belgium’s pension system faces increasing pressure due to an aging population, financial constraints, and the need for modernization. The number of retirees is increasing, while the working population is decreasing. The legal retirement age of 65 becomes more of a fiction, as most people retire before turning 65. Furthermore, in 2022, Belgium’s fertility rate stood at 1.53 children per woman—far below the 2.1 threshold required for a population to renew itself. This demographic shift raises critical questions about the sustainability of our pension system.
Reforms are necessary but often unpopular, requiring public and social partner involvement for better acceptance. As Pierre Delvolder, Professor at UCL, pointed out in an interview: “We need to stop these successive ‘mini-reforms’ that only make the system increasingly complex and erode public trust. Without real structural changes, the impact of aging could lead to a long-term cost increase of around 4 percentage points of GDP.”
During the IABE pension seminar on February 2025, Devolder highlighted a particularly striking point. As shown in the slide below, Belgium ranks among the lowest-performing countries in terms of pension evolution. Based on current pension reforms, the average pension amount as a percentage of the gross average salary will remain unchanged between 2022 and 2070, unlike other countries where improvements are expected. This stagnation raises questions about the effectiveness of the current reforms and the challenges ahead in ensuring a sufficient pension level for future generations.
As part of the publication of the “Lettre Decavi“ on this topic, we are sharing the key criteria to consider for the future evolution of our pensions.
Pensions: What to expect?
Belgium, like many European countries, is facing an accelerated aging of its population. The life expectancy of people aged 65 and over is gradually increasing, while the ratio between workers and retirees is decreasing. This imbalance is putting growing pressure on pension funding, as fewer workers contribute while the number of beneficiaries rises. In 1992, there were 4.37 workers for each retiree, compared to 3.16 in 2024, and this figure is expected to drop further to 2.22 by 2070. This trend threatens the viability of the current system.
Spending on pensions represents a growing share of Belgium’s GDP. According to the 2024 report from the Study Committee on Aging, these costs, which stood at 11.2% of GDP in 2023, could reach 13.7% by 2070.
To address these challenges, reforms are being considered, notably by raising the legal retirement age, which is currently set at 66 and scheduled to increase to 67 by 2030. It is not excluded that this age could be raised further in the future, depending on life expectancy trends.
Other solutions are being studied to ensure the sustainability of the system, such as increasing employment and productivity rates or revising the pension calculation method. This could include adjusting pension amounts based on contribution duration and the country’s economic situation. Belgium will therefore have to find a balance between extending working life and implementing measures that ensure a decent retirement for all.
What has been done in the past?
The Belgian government had initiated reforms to strengthen the viability of the pension system, notably by introducing an effective work requirement for the minimum pension, a “pension bonus” to encourage longer careers, and a reform of the pension indexation system for civil servants. However, these measures remain insufficient in the face of demographic and financial challenges.
More profound reforms are being considered, such as a “points-based pension system” to better balance contributions and benefits. The goal is also to correct inequalities between different forms of employment and reduce the pension gap between men and women, ensuring a fairer and more sustainable system.
Encouraging supplementary pensions : A solution?
To compensate for the limitations of public pensions, the authorities promote complementary pensions (2nd and 3rd pillars). In Belgium, the statutory pension covers 45% of the last salary (compared to 54% in Europe), making these supplementary schemes essential.
Insurance companies offer several options:
- Branch 21: guaranteed rate.
- Branch 23: variable return.
- Branch 44: a mix of both.
Tax incentives, particularly for employers, could be strengthened to further encourage pension savings.
And let’s not forget the impact of inflation…
Inflation threatens the purchasing power of retirees, necessitating regular adjustments to pensions, which adds pressure on public finances. Therefore, the management of pension indexation will be a key challenge.
Regarding complementary pensions, the minimum return guarantee on group insurance will rise from 1.75% to 2.50% in 2025. If the insurer does not meet this return, the employer will be required to compensate for the shortfall.
Conclusion
Belgium’s pension system needs sustainable and flexible reforms to adapt to demographic shifts, diversified careers, and inflation. Future changes will aim for financial balance while ensuring fairness for retirees and workers. According to Pierre Devolder, several solutions could be favored. Digitalization and artificial intelligence could improve the management, transparency, and adaptation of pensions to demographic and economic changes.
Source :
Decavi, Pensions : quelles évolutions et quelles solutions ?, Février 2025