As an employer, how do you contribute to your employees' pensions?
March 2023 – For many people, retirement is a "faraway show". Moreover, there are very persistent misunderstandings about this complex topic. You may also notice this as an employer. One employee does not lose sleep over his or her pension savings, while another - usually somewhat older - colleague follows this matter closely.
Pensions are also a core issue for policymakers in our country. In July 2022, the federal government reached an agreement (albeit provisional) on a pension reform for companies and the self-employed, with central dossiers in the spotlight: access to the minimum pension, the introduction of a pension bonus and a measure for greater gender equality.
Unfortunately, there is a lot of tug-of-war between political parties today to get this reform definitively on track. And that only makes things more confusing for you as an employer
Today, what are your obligations as an employer when it comes to pension accrual for your staff?
Question 1: when will your employee retire?
From the moment your employee reaches retirement age, he or she may enjoy a well-earned pension. Today, that age is 65. In 2025, that age will be raised to 66 and in 2030 to 67.
A worker can also retire early. This is possible at the earliest at the age of 63 and after 42 proven career years. For long careers, early retirement is possible from the age of 60.
Question 2: What are the ground rules for statutory pensions?
When the statutory retirement age is approaching, the employment contract between employer and employee can be terminated according to the normal calculation periods of notice periods.
When terminating an employment contract from the first month following the month in which your employee reaches the statutory retirement age (65 years), a maximum notice period of 26 weeks applies. In practice, it often happens that an employment contract is terminated by mutual agreement. As an employer, you do not have to make any arrangements regarding the payment of the statutory pension - the first pension pillar.
Question 3: how do you correctly build up a supplementary pension for your staff?
With regard to the second pension pillar - the supplementary pension - you, as an employer, must fulfil a number of obligations.
Sometimes a sectoral pension plan exists within a business sector. However, you can opt not to participate in this sectoral scheme and organise a supplementary pension through a company plan.
The moment your employee retires, the payment of the supplementary pension will follow. Again, as an employer, you do not have to do anything, as it is the pension institution (your insurer or pension fund) that contacts your employee and arranges the practical arrangements in terms of payment.
Question 4: What practical ground rules apply when building up a supplementary pension?
Do you offer a supplementary pension to your employees? If so, a pension institution (an insurer or pension fund) will manage the supplementary pension plan. You make periodic (monthly or annual) contributions to the pension institution. In defined benefit plans, the pension institution calculates how many contributions must be paid to fund the promised supplementary pension by retirement age. In defined contribution plans, the amount depends on how many contributions are deposited.
Some employers ask their employees to make a personal contribution to the supplementary pension. In that case, it is important to note that you deduct the requested pension contribution from net pay and transfer it to the pension institution. The pension regulations determine who makes contributions (the employee, the employer or both).
