The new Financial Peace of Mind Barometer, a study in which insurer NN surveys Belgians’ financial peace of mind on a semi-annual basis, shows that one in three Belgians is strongly in favor of replacing the retirement age with career years. “The current pension system is outdated,” the insurer said. “Those who work longer should also be entitled to a higher pension. That is not always the case in the current system.”
In the news: 32 percent of Belgians want to replace the current pension system, which primarily looks at the retirement age to determine when someone can stop their career, with a so-called career years model.
- Among people over 65 (44%) and self-employed people (45%), almost half believe in the potential of the career years model.
- Yet not every compatriot is convinced of this. A third (33%) have yet to form an opinion and a third (35%) are against another pension system.
The advantages of a career years model
Details: NN is already making a plea for the career years model.
- “The current pension model is largely outdated, for example, due to new forms of society or careers in which employees switch more than before between jobs, statutes, and personal events such as care tasks,” says Bart Chiau, senior expert at NN and professor at Ghent University. “There is a clear need for a pension model that takes this reality into account and can also guarantee affordability, fairness and solidarity.”
- According to the insurer, this goal can be achieved by replacing the statutory retirement age with a system based on career years. “Those who work longer should also be entitled to a higher pension. That is not always the case in the current system,” says Chiau.
- Colin Sanders, Longevity Expert for NN, cites the example of a person who started working at the age of 18. Under the current system, they can take early retirement after a career of 43 years. At that moment he is 61 years old.
- The government recently reached an agreement on pension reform. Someone who works up to 3 years after retirement is eligible for a pension bonus. But according to Chiau, that system is inadequate. “If the person in our example works until the statutory retirement age of 67, he has worked for 47 years, but he does not accrue additional pension rights for those last two years,” it said.
- According to Sanders, the career years model can also have a positive impact on employee well-being. “This model allows people to take breaks during their careers for, for example, moments of recharge, taking on care tasks or long-term training, which they can later compensate by working longer,” it says. “In this way, we make positive use of the extra time we have by converting increasing life expectancy into better quality of life during our career.”
Abolition of retirement age as a solution to the Belgian aging problem?
Also this: Furthermore, NN is convinced that the career years model can help keep Belgians working longer. And that is certainly not an unnecessary luxury, because according to data from the European statistical agency Eurostat, the Belgian career is one of the shortest in all of Europe.
- Belgians work an average of 34.5 years. For comparison: The Netherlands registers an average career length of 43.2 years, Germany of 39.3 years, and France of 36.6 years.
- If the Belgian works for an average of 34.5 years and then enjoys his pension for an average of 24 years, this means that the income from 40 percent of working years must cover the expenses for the other 60 percent of our lives, including the retirement period. “In this way, young people and workers are victims of rising pension expenditure. Especially with the aging wave that is coming our way, these costs are becoming unrealistically high,” says Sanders.
- According to the insurer, the challenge mainly occurs at the end of the career, although some progress has been made in the past decade. “The employment rate of Belgian 55 to 64 year olds increased from 41.7 percent in 2013 to 56.6 percent in 2022. Although here too it is important to put those figures in perspective because in the Netherlands and Germany approximately 73 percent of people in that age group are active,” explains Colin.
- Research by NN already shows a change in mentality among active people over 50 in Belgium. “The average desired retirement age increased by 3 years in the past 10 years to 63.8 years. Self-employed people remain the leaders with an average desired retirement age of 66,” Sanders emphasizes. “That shows that Belgians do not necessarily hold on to the idea of absolutely retiring at the age of 65.”
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