National Bank must shore up pension funds with 109 million euros

The National Bank had to make an exceptionally large deposit last year to absorb the impact of high inflation on the supplementary pensions of 1,200 employees.

It is known that the National Bank – which recorded a record loss of 3.4 billion euros last year – pays its staff well. Not only the directors, who earn more than the Prime Minister, but also the approximately 1,600 other full-time equivalents. The pensions are also generous. As in many companies, National Bank employees receive a supplementary pension in addition to their statutory pension, the so-called second pillar.

The costs of that supplementary pension rose spectacularly last year at the National Bank. It had to spend an additional one-off €108.9 million on ‘financing the pension plan with fixed benefits for part of the staff’, the company report states.

This expenditure is in addition to the ‘normal’ contribution, which amounted to 39.5 million last year. ‘The one-off grant should cover the impact of the sharp increase in inflation in 2022.’ The large contribution can probably be explained in part by the fact that relatively many employees have almost reached retirement age.

Personnel costs at the National Bank increased by 41 percent to 451 million euros last year, mainly due to the extra contribution.

There are broadly two types of supplementary pension. The first type is a defined benefit or benefit plan. This promises the beneficiaries a specific amount, usually a multiple of the last annual salary. The very high inflation in 2022 has caused these promised pensions to rise sharply. And it is precisely this type of plan that is very common at the National Bank: everyone who was employed on December 31, 2016 – which applies to 1,204 employees or almost three-quarters of the total – has a supplementary pension with a fixed benefit.

If the full amount that the National Bank paid into this pension plan last year (148.4 million euros) flows to those 1,204 people, they will receive an average of 123,250 euros. The National Bank does not want to reveal the total reserves of this pension plan, but it is clear that these are substantial benefits.

For example, last year 13 former executives were told that their supplementary pension had exceeded the so-called Wijninckx ceiling. That ceiling applies to all government pensions and is just over 7,800 euros gross per month, but it can be increased by 20 percent when it comes to allowances that fall under the second pension pillar.

Other companies with many employees with this type of plan also had to pay extra money into the pension fund in 2022 or 2023, says PensioPlus, the association of pension funds.

The second type of supplementary pension is one with fixed contributions. In this case, the employer does not promise the employees a specific amount, but undertakes to make periodic contributions to the plan, usually a percentage of the salary. The final pension amount then depends, among other things, on the return on the investments. Only employees who joined the National Bank from 1 January 2017 benefit from a supplementary pension with fixed contributions.

Finally, there is a separate plan with fixed benefits for the six directors of the National Bank. The contribution to that plan last year amounted to 884,927 euros. But there are very large differences per board member. The contributions ranged from 10,147 euros (for Géraldine Thiry) to 390,940 euros (for Tom Dechaene). ‘The variability is determined by, among other things, the basic salary, the duration of the mandates, the reserve already accrued and the remaining term until retirement age.’ Thiry has only been director since September 1 last year, while Dechaene is the oldest director.