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Belgian Supreme Court strengthens position on act on occupational pensions (28 April 2003) in its judgment of 6 March 2017

  • Belgium
  • Pensions


A. Decision

In its judgement the Supreme Court stated that an organizer of a pension arrangement (the employer) is liable for all of the vested reserves, as well as deficits regarding the minimum guaranteed return. The cause of the deficits are irrelevant for the Supreme Court.

B. Background on Belgian occupational pensions

Private pension arrangements in Belgium are generally governed by the Act of 28 April 2003 on occupational pensions. Pension contributions by the employer can be seen as voluntary (if not bound by a sectoral agreement) and paid to the pension fund in accordance with the terms and conditions of the policy provider.

Traditionally, defined benefit plans were very successful in Belgium, but defined contribution plans have recently become more dominant due to the advantages for employers.

Before 2016, the law provided a guaranteed return of 3.25 per cent on employer contributions and 3.75 per cent on employee contributions in defined contribution plans. Due to the recent economic climate, it was decided that these percentages were too high. Therefore, as from 2016 the return that is guaranteed corresponds to the percentage of the average of the last 24 months of returns of the Belgian linear bonds with a duration of 10 years. This will be a percentage between 1.75% and 3.75%.  Based on these rules the guaranteed return for 2016 and 2017 will be 1.75% and this both for the employer and employee contributions.

C. Facts on which the judgement of the Supreme Court is based

The Labour Court of Antwerp stated on 25 June 2014 in the relation of the liquidation of the pension provider ‘Apra Leven’ (2011) to cover all deficits in relation to the guaranteed return as described under point B.

The argumentation behind this position is that the employer stays the final responsible for the fulfillment of the pension obligations towards its employees. This is because there is a trilateral relationship created in case of a pension arrangement by an employer (for instance with an insurance company or pension fund). The pension provider controls the pension contributions and will pay these finally to the employees of the employer. The employer stays responsible under Belgian labour law due to the fact that the employees do not have a direct relationship with the pension provider. Moreover, pension contributions can be seen as ‘salary’ and therefore an employer will be the final responsible for the return.

In the case at hand the organizer (employer) went to the Supreme Court to challenge the decision of the Labour Court of Antwerp. The argumentation was that the company could not be held liable as the issue was created by the insurance company.

As mentioned the Supreme Court stated very clearly that the organizer stays the final responsible and that the causes for any deficit are irrelevant.