Belgian pension system is on a collision course

Published on: 11 February 2022

The second-best pension system in the world. That's what we have in the Netherlands, according to the annually published Mercer CFA Institute Global Pension Index, which includes 43 countries. Are other countries doing so badly? Every two weeks, for twenty weeks, we delve into the system of a specific country. For this episode, we're looking a little closer to home. We're going to the land of the Rode Duivels, specialty beers and Manneken Pis: Belgium.


Belgium occupies the 17th place in the Mercer rankings and, with a C+ rating, its pension system is in the same group as the US and France. An adequate pension, but in a system that is far from sustainable. This is how you could describe the situation in Belgium.  

With a few exceptions (such as, e.g., judges and miners), the retirement age in Belgium is 65. In 2025 and 2030 it will be raised to 66 and 67 respectively. Not so long ago, women were allowed to retire earlier than men, but this was equalized in 2010. In the past, many Belgians used a scheme that allowed them to retire earlier, which led to the fact that in 2008 only one in three people over 55 were still working, which is not desirable. Today, more than half of those over 55 are working, but only 37.5 percent of 61-year-olds are still working. 60 is the minimum age at which Belgians can take early retirement, after 44 career years, 61 after 43 career years and 63 after 42 years. On average, men in Belgium still enjoy 21.2 years of retirement, women 25.5 years.


Less advantageous

Like the Netherlands and Germany, Belgium has a first pension pillar that is financed on a pay-as-you-go basis. In the first pillar, the employed together pay for the old age of the pensioners. In contrast to our state pension, the amount of the state pension in Belgium depends on the amount of your salary and the number of years you have worked (in the Netherlands it is a fixed amount). In principle, you receive 60 percent of your salary as a pension, unless your partner is financially dependent on you. In that case it is 75 percent (this percentage is used if the sum of your and your partner's pensions is less advantageous at 60 percent).


As you can see, the Belgian state pension depends on what you earned in your working life and how long you worked. But there are also some guidelines to guarantee a certain minimum pension, under certain conditions (2021: 1440 euros per month for a single person and 1800 euros per month for a household). And there is a limit on the income over which you accrue pension rights in the first pillar. In 2019, this was an annual income of 59,615 euros. 


Financial safety net
In addition to the state pension, there is also a financial safety net for the elderly in Belgium: the GRAPA (Garantie de revenu aux personnes âgées). If you share a household with someone else, you are entitled to 9,235 euros per year. Do you live alone? Then you get a lot more, 13,852 euros. You will not receive benefits from the GRAPA scheme until you reach 65. The Belgian system also has a system whereby - under certain conditions - the pension accrual continues for those who do not work for a period of time. For example, a period during which you care for the children, but also during unemployment. 

A supplementary (second pillar) pension is not mandatory for our southern neighbors, in the sense that the employer or professional sector decides whether to set up a pension plan. But if your employer or sector has set up a scheme, it is mandatory for you to participate in it. In addition to these supplementary pension schemes, in Belgium you can buy (third pillar) insurance products as an individual, which are tax-deferred. 


45 years of employment
Self-employed people can receive a maximum of 1,500 euros as retirement benefits after 45 career years in which they paid social contributions. In reality, the average is 751 euros. As an employee, you receive a maximum of 2,250 euros after 45 years of service, and the average is 1,281 euros. For civil servants, the maximum pension benefit is 6,800 euros. In practice, the average is around 2511 euros. Someone with an average income receives just under 62 percent of this in Belgium as a net pension.

All in all the pension of our southern neighbors is definitely not scanty, but that also comes with a price tag. The Belgian system relies heavily on pay-as-you-go funding. And the population in Belgium is also aging, meaning the decreasing number of people in employment have to provide for the pension of an increasing number of pensioners. If the system is not reformed, the aging society will hit the Belgian system in the center. In order to keep the system affordable, austerities in the decades to come are inevitable. 

The Belgian pension system:  Facts & figures


Valuation in the Mercer CFA Institute Global Pension Index 2021: C-Grade; in this case C+ (C-Grade involves “a system with some good qualities, but also major risks and shortcomings. If these are not addressed, it is questionable whether the system will be sustainable and adequate in the long term.”)


Structure: Two-pillar system, with participation in the second pillar mandatory only if the employer or sector concerned has a pension scheme.

Funding: Based on pay-as-you-go (first pillar) and equity funding (second pillar).

Adequacy (Mercer ranking): 8th

Sustainability (Mercer ranking): 37th

Integrity (Mercer ranking): 5th










Net pension







Net replacement ratio







Total net pension equity at retirement








Explanation of chart:

The column under "1" reflects the situation for someone with the average net income. The column under 0.5 reflects the situation for someone with half the average net income, et cetera.

Net pension: the net pension someone receives as a percentage of net average income. 

Net replacement ratio: the net pension that someone is left with, expressed as a percentage of that individual's total wages.

Total net pension assets: value of expected benefits as a multiple of net annual income.