The Act amending several provisions to reinforce transparency under the second pension pillar, also known as the "Transparency Act" was published in the Belgian Official Gazette on 2 February 2023.
A recent opinion poll has shown that the second pension pillar currently has 4.13 million participants, 3.1% more than in 2022. Still, 1/3 of workers currently do not have access to a supplementary pension. Based on this research, the government decided to make the system more accessible, readable and predictable in order to increase public confidence in the current pension system. This distrust is mainly due to the uncertainty about the future pension and the high complexity of the existing pension system.
In this article, we discuss three aspects of the transparency act and its impact on the second pension pillar:
To create a level playing field for pension funds (Institution for Occupational Retirement Provision, IORP) and insurance companies, the same rules now apply to all pension institutions. The new communication rules were already partially included in the LIRP/WIBP (the law of October 27, 2006 on the supervision of institutions for occupational retirement provision), so the impact of the Act on IORPs is limited. However, the Transparency Act does significantly amend the Belgian Law on supplementary pensions (“LPC/WAP”), the Act of 28 April 2003 on Supplementary Pensions and the system of taxation, which applies not only to IORPs but also to insurance companies.
In addition to the general principles of the Transparency Act establishing an obligation to communication information in a harmonized manner, the Transparency Law also creates obligations to communicate specific information at different stages of retirement benefits.
The affiliation letter should inform new or potential members about the relevant pension plans. This obligation already exists for IORPs, but is new for insurance companies. The IORP II Directive does not indicate the form or document in which this should be done but the FSMA (the Belgium Financial Services and Markets Authority) is responsible for establishing a standard version. Thus, IORPs will need to wait for new format to be issued.
This will apply from 1 January 2025.
The Transparency Act requires that certain information be made available to participants and beneficiaries. This requirement already exists for IORPs, but is new for insurance companies.
Applicable from 1 January 2025.
From 1 January 2023 the employer is no longer obliged to provide information and this obligation to provide information before retirement lies solely with pension institutions (IORPs and insurance companies).
The pension institution must provide members with new information about their ability to pay a supplementary pension in accordance with the new deadlines established by the law. Among this new information, it is important to mention that the supplementary pension will be paid automatically by the pension institution to the bank account where the statutory pension is paid (provided that the member has given his consent). The new obligations apply to IORPs who will have to update retirement letters. The FSMA is expected to issue guidelines by this summer.
Applicable from 1 January 2024.
Starting January 1, 2024, members will receive an annual benefit statement prepared by Sigedis and no longer by each pension institution individually. The Transparency Law introduces additional elements in the LPC/WAP that must be communicated to members, like:
Since the provisions related to benefit statements have already been partly included in the LIRP/WIBP, benefit statements already provided by IORPs might be subject to few additions, mainly when it comes to projections
The division of the pension statement into two parts has been abandoned in the LPC/WAP
The Transparency Act provides for administrative simplification by strengthening the role of Sigedis and mypension.be in managing and exchanging data. As of 1 January 2024, the benefit statement is provided annually and automatically to members by Sigedis via mypension.be. Members (with registered email address) will be notified via email or the Social Security e-Box. An electronic version will be made available to pension funds, including whether or not a notification has been sent to the member. If not, the pension fund is responsible for sending the benefit statement to active affiliates who have not received a notification.
The law also simplifies the payment procedure for very small pension/death benefits, where the capital does not exceed 150 euros (indexed). If the member has registered his address on mypension.be, communication of information will be handled by Sigedis.
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