- 12 Nov 2018
Soon, employees who do not or only have a limited occupational pension scheme will be able to set up an occupational pension on their own initiative, with a pension provider of their choice, through deductions from their salaries. The rules are laid out in the bill of 31 October 2018 on the implementation of a voluntary occupational pension for employees (“VOPE”), which is expected to enter into force in the first quarter of 2019.
Who is it for?
Employees who do not have an occupational pension scheme at either industry or company level, or who contribute to an occupational pension that is lower than 3% of the pensionable salary (with an absolute minimum of EUR 1,600) are eligible to take advantage of the VOPE.
As from 2019, employees who fall under the scope of the VOPE will be able to conclude a VOPE agreement with a pension provider. Insurance companies as well as pension funds can offer this product. In that case, the employer will be obliged to deduct a VOPE contribution from the employee’s net salary and transfer this to the pension provider. At least two months in advance, the employee must inform his employer about the amount and the frequency of the contributions. Also, he will hand over to his employer a certificate from the pension provider, confirming the VOPE agreement and the identification details of the chosen pension provider.
The employer is not a contracting party of the VOPE agreement, which is between the pension provider and the employee; however, the employer does has an important administrative function, namely deducting and disbursing the VOPE contributions. The employee can only change the amount of the VOPE contributions (or terminate the contributions) twice a year.
The legally guaranteed investment return does not apply to the VOPE agreement. Thus, employees will only enjoy the investment return offered by the pension provider.
Employers may, if they wish, contract a framework agreement with a specific pension provider in which individual VOPE agreements between employees and the pension provider can be included. Nevertheless, the employee is always free to choose another pension provider.
How high may the VOPE contributions be?
The employee can autonomously decide the amount of his VOPE contributions, with a maximum of 3% of the pensionable salary (which is the gross salary, subject to social security), earned in the second year (n-2) before the year of accrual (n). However, if 3% of the pensionable salary is less then EUR 1,600 (2019), the maximum VOPE contribution amounts to EUR 1,600.
If the employee already enjoys a (limited) occupational pension scheme, the growth of the accrued reserves between the second (n-2) and the first (n-1) year before the year of accrual (n) will be deducted to determine the maximum VOPE contributions.
Tax and social security
On the VOPE contribution, employees will enjoy a tax deduction of 30% (+municipal tax) if the 80% rule is respected. Besides that, the employee has to pay a 4.4% premium tax on the VOPE contribution. The lump sum is subject to a 3.55% ZIV contribution and a 0–2% solidarity contribution. In principle, the lump sum will be subject to a tax of 10% (+municipal tax). The employer will have no tax or social security implications because VOPE contributions are deducted from the net salary.
Abolishing of the individual continuation of the pension scheme
As a result of the entering into force of the VOPE, the individual continuation of the pension scheme, as stated in Article 33 of the Act on Occupational Pensions (“AOP”), will be abolished.
> Action point
Check if your employees contribute to an occupational pension of at least 3% of the pensionable salary, subject to social security, or at least EUR 1,600. If this is not the case, when the VOPE enters into force, you are obliged, on request of the employee, to deduct VOPE contributions from the the employee’s net wage and disburse them to the pension provider.