Financing of social security: historic reform

After the federal government, the parliament has now also approved the long-awaited reform of Social security Social security is currently managed at the Federal level in Belgium. The most important pillars of Belgian social security are: sickness and invalidity insurance (NIDHI), pensions, unemployment insurance and child allowances. In addition, occupational illness, occupational accidents and annual holidays are dealt with at this level. Some Flemish parties have been campaigning for years for (large parts of) social security to be transferred to the Regions and Communities. social security . In this regard, the political weight of the N-VA is clearly tangible. For example, an end is being put to the tradition in which social agreements entail costs that are passed on to the taxpayer. "Despite the best efforts of the opposition to derail the reform, and the panic-mongering by the social partners, the government has stood firm. It goes without saying that we are very satisfied with the result," the N-VA confirms.

The expenditure on social security - some EUR 85 billion annually - is financed for approximately two thirds from the social contributions on employment income and the other 40% comes from general tax revenues. Up to now, deficits have been automatically adjusted using tax revenue via an equilibrium endowment. In future, in social agreements with an additional budgetary impact, the government will each time request the social partners for an objectification and compensatory alternatives. Based on this it will decide whether or not to carry out those social agreements in full or in part.

On top of this the national subsidy - a flow of general tax revenue to social security - will from now on be adapted to suit budgetary resources. It can only be increased in the case of strong economic growth coupled with an increase in the retirement age of at least six months. If the government and the social partners want higher expenditure, they must also ensure that more people work longer, thereby increasing structural income.

Accountability, simplicity and transparency

“After literally 15 years of standstill, we are finally carrying out the much-needed structural changes in the financing mechanisms of our social security. At the same time we are restoring democratic control on the allocation of tax revenue in social security and we are giving more responsibility to the social partners," says the N-VA. "Furthermore, with this reform we are guaranteeing the financial stability of our social system, but without allowing the tax pressure to spiral upwards even further." Finally, the whole financing approach is being greatly simplified and becoming more transparent. The jumble of alternative financing flows that has developed over the years is being reset to income from VAT and withholding tax.