The new year marks the introduction of a new retirement age in Belgium. From 2025, employees, self-employed workers and civil servants can only retire at the age of 66 instead of 65. Not only that, in 2030 the retirement age will rise even further to 67.
Raising the statutory retirement age has an impact on employers as well. A number of key consequences are set out below.
End of the employment contract
Under Belgian law, reaching the retirement age does not automatically mean the end of the employment contract. Any contractual clause providing that employment automatically ends on the retirement age is also invalid. Either the employee or the employer must take the initiative to terminate the employment contract upon retirement, or the employment contract must be terminated by mutual agreement. Normal termination rules (including notice periods) have to be respected.
However, in the event of termination by the employer with a view to retirement, a deviating notice period applies. Indeed, if the employer gives notice to terminate an open-ended employment contract from the first day of the month following the month in which the employee reaches the statutory retirement age, the notice period is a maximum of 26 weeks.
Employers who want to make use of this deviating notice period of a maximum of 26 weeks thus have to take the increased statutory retirement age into account.
Pension bonus
The recently (re-)introduced pension bonus is an extra bonus (on top of the statutory retirement) that an employee can accrue if they continue to work after the earliest date of retirement. The longer the employee continues to work, the higher the amount of the pension bonus. The bonus can only be accrued for a maximum of three (3) years.
The earliest date on which the employee can retire is either the date of early retirement, or the statutory retirement age if the employee does not meet the conditions for early retirement. The increased statutory retirement age may therefore also have implications on the accrual of the pension bonus.
Supplementary pensions
Many employees build up a supplementary pension scheme, on top of their statutory retirement pension, through their employment (second pillar). Such pension schemes are financed by employer contributions and/or personal contributions of the employee
The payment of benefits under the supplementary pension scheme is linked to the payment of the statutory retirement pension: when the employee goes into retirement (early or otherwise), their supplementary pension scheme is automatically paid out, regardless of the age included in the pension scheme. The increased statutory retirement age may therefore result in a longer period of affiliation to the supplementary pension scheme and thus to higher contribution payments (by employers and employees). The impact will be most significant for supplementary pension schemes of the defined benefit type.
In addition, the tax rate of pension benefits under the supplementary pension scheme depends on the statutory retirement age. Employees who take up their supplementary pension scheme at the earliest upon reaching the statutory retirement age can claim a favourable tax regime it they have remained active until that age.
Timing and next steps
The retirement age of 66 will be applicable to pensions that commence for the first time on 1 February 2025. Employers are henceforth advised to consider this new statutory retirement age when dealing with employees reaching the statutory retirement age.
For further information, please contact Julien Hick (+32 2 629 42 53 or Jhick@akd.eu) or Heleen Franco (+32 2 629 42 73 or Hfranco@akd.eu).
The new year marks the introduction of a new retirement age in Belgium. From 2025, employees, self-employed workers and civil servants can only retire at the age of 66 instead of 65. Not only that, in 2030 the retirement age will rise even further to 67.
Raising the statutory retirement age has an impact on employers as well. A number of key consequences are set out below.
End of the employment contract
Under Belgian law, reaching the retirement age does not automatically mean the end of the employment contract. Any contractual clause providing that employment automatically ends on the retirement age is also invalid. Either the employee or the employer must take the initiative to terminate the employment contract upon retirement, or the employment contract must be terminated by mutual agreement. Normal termination rules (including notice periods) have to be respected.
However, in the event of termination by the employer with a view to retirement, a deviating notice period applies. Indeed, if the employer gives notice to terminate an open-ended employment contract from the first day of the month following the month in which the employee reaches the statutory retirement age, the notice period is a maximum of 26 weeks.
Employers who want to make use of this deviating notice period of a maximum of 26 weeks thus have to take the increased statutory retirement age into account.
Pension bonus
The recently (re-)introduced pension bonus is an extra bonus (on top of the statutory retirement) that an employee can accrue if they continue to work after the earliest date of retirement. The longer the employee continues to work, the higher the amount of the pension bonus. The bonus can only be accrued for a maximum of three (3) years.
The earliest date on which the employee can retire is either the date of early retirement, or the statutory retirement age if the employee does not meet the conditions for early retirement. The increased statutory retirement age may therefore also have implications on the accrual of the pension bonus.
Supplementary pensions
Many employees build up a supplementary pension scheme, on top of their statutory retirement pension, through their employment (second pillar). Such pension schemes are financed by employer contributions and/or personal contributions of the employee
The payment of benefits under the supplementary pension scheme is linked to the payment of the statutory retirement pension: when the employee goes into retirement (early or otherwise), their supplementary pension scheme is automatically paid out, regardless of the age included in the pension scheme. The increased statutory retirement age may therefore result in a longer period of affiliation to the supplementary pension scheme and thus to higher contribution payments (by employers and employees). The impact will be most significant for supplementary pension schemes of the defined benefit type.
In addition, the tax rate of pension benefits under the supplementary pension scheme depends on the statutory retirement age. Employees who take up their supplementary pension scheme at the earliest upon reaching the statutory retirement age can claim a favourable tax regime it they have remained active until that age.
Timing and next steps
The retirement age of 66 will be applicable to pensions that commence for the first time on 1 February 2025. Employers are henceforth advised to consider this new statutory retirement age when dealing with employees reaching the statutory retirement age.
For further information, please contact Julien Hick (+32 2 629 42 53 or Jhick@akd.eu) or Heleen Franco (+32 2 629 42 73 or Hfranco@akd.eu).