De Croo wants to convince Europe of pension reform with smoke and mirrors

Europe has made the release of hundreds of millions of euros in recovery money dependent on measures that keep the pension bill within limits. “But this pension reform is insufficient to safeguard the statutory pension scheme,” argues MP and pension specialist Wim Van der Donckt when discussing the De Croo government’s planned pension reforms.

“The effective retirement age in Belgium is 60 years. People stop working so early in few other countries, usually after a career with many periods of absence from work. On the other hand, pension expenditure will increase to 13.5% of gross domestic product by 2050,” says Wim. “The solution is therefore obvious: keep more people working longer and improve the link between working and the pension amount. However, the De Croo government has done the opposite: minimum pensions were increased en masse without attaching many conditions. The EU has already calculated that this will lead to an additional cost of 1.2% of GDP The gross domestic product (GDP) is the total monetary value of all goods and services produced within a country, both by companies and the government. This term is usually used as a benchmark for a country’s prosperity. This is why the N-VA closely follows the evolution of the Belgian GDP. GDP .”

Compensatory measures

Prime Minister De Croo has now presented the compensatory measures promised to Europe: the introduction of a work condition in connection with access to the minimum pension, the introduction of a pension Bonus Career break for the calculation of, specifically, civil servant’s pension. In order to obtain the annual pension amount in the public sector, the reference salary is multiplied by the number of employment years. That result is then multiplied by the 1/60 career break, the so-called bonus. An advantageous break applies for certain employees, so that they can reach the maximum pension more quickly. bonus , changes to the equalisation and a doubling of the Wijninckx contribution on supplementary pensions.

Smoke and mirrors

The long-term budgetary effect is barely 0.005% of GDP due to the many exemptions, exceptions and neutralisations. Calculations by the Court of Audit show that the pension bonus does not result in any savings in the long term (from 2025, the pension bonus would even lead to additional expenditure). In particular, the reform of the equalisation of civil servants’ pensions excels in optimistic forecasts and draws on hoped-for (productivity) growth forecasts between 2034 and 2070.

But the effect by 2040 is that the impact of this “reform” will be less than 0.1% or even negative, while by then, the cost of ageing will increase by 2.7% of GDP, according to the European Commission.

The harsh reality

In the meantime, pension costs are increasing: in 2020, they amounted to EUR 51.7 billion annually; in 2023, EUR 67.4 billion and in 2024, over EUR 70 billion. The bitter conclusion remains: the federal government under the leadership of Alexander De Croo has structurally increased the pension bill further, knowing full well that rising pension costs pose a very serious problem for public finances.

“Will we be able to convince the European Commission with this?” Van der Donckt wonders.