Teacher Gordon Mackenzie, 55, has worked in Belgium since 1990 and steadily built up hefty social security contributions. But he feared he wouldn't be able to claim his pension if he retired abroad.
The American says: "It seems unjust that after a career in Belgium you can't move to another European Union country - let alone the US - and still get the pension you've earned."
As it turned out, a social security treaty between the US and Belgium means Mackenzie will be able to claim his Belgian pension - no matter where he ends up. But if you're not American, do you know if you're covered? Will you be able to enjoy the pension you've earned in Belgium if you retire elsewhere? Find out with our guide to the Belgian pension system.
How does the Belgian state pension system work?
The compulsory federal pension system has three schemes: for private sector salaried workers, the self-employed and civil servants.
Salaried workers. Pension contributions are extracted directly from workers' wages. Deductions currently amount to 16.38 percent of employees' wagepackets (8.86 percent paid by the employer and 7.5 percent by the employee) .
To get a full pension, workers must reach the official retirement age of 65for men and 62 for women (the latter will gradually rise to 65 by 2009). Men must have worked for 45 years and women for 42, although that will also rise to 45 by 2009.
Early retirement (with a reduced pension) is possible from the age of 60, if the worker has worked at least 32 years (this will rise to 35 in 2005).
When salaried workers retire, their pension is calculated at 60 percent (for single people) and 75 percent (for the family breadwinner) of the accumulated wages they have earned over their entire career divided by the number of years they've worked. There is a ceiling: a maximum £36,835.36 (at present) can be taken into account for each year. Past earnings are adjusted to reflect consumer price index changes.
Self-employed. The self-employed pay their quarterly social security contributions to social insurance funds; the percentage of income they must pay depends on their earnings - ranging from nothing at all for .high earners to around 16 percent. When it comes to working out their pension entitlements, everything earned as a self-employed person up to 1984 is considered a lump sum. After that year, it is based on their annual salaries - with a ceiling of €47,505.32. Their pension is calculated by adding the lump sum and accumulated wages earned and dividing that by the number of years worked.
Like salaried workers, they then get 60 percent (for single people) and 75 percent (for family breadwinners) of that amount. Retirement ages are also the same.
Civil servants. The retirement age for civil servants is already 65 for both sexes - and they must retire when they reach that age, while salaried workers and the self-employed may continue working.
Civil servants' pensions are drawn from their wages - the employee pays roughly 20 percent (this percentage is variable) and the employer a fixed 7.5 percent. Unlike in the previous two schemes, civil servants' pensions are calculated on the basis of their average income during the last five years worked. The calculation method is the same, but civil servants all get 75 percent of the final sum, regardless of family situation.
There is a minimum provision in each system, provided the pensioner has worked for at least 15 years. A social assistance scheme, known as Grapa (French)/ IGO (Dutch), provides backup for those with insufficient income.
What if my partner dies?
Survivors' pensions are granted to dependent widows and widowers based on their spouse's employment history, whether he or she was retired, and the number of dependent children. To receive such a pension, the survivor must be aged 45 or over, although they can benefit earlier if they are unable to work or have dependent children.
Do I have to remain in Belgium to receive my state pension?
It depends on your nationality. Those who come from member states of the European Union and European Economic Area (Denmark, Germany, Finland, France, Greece, Iceland, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Portugal, Austria,
Spain, Britain and Sweden) and their surviving spouses may draw their Belgian pension no matter where they live in the world after retirement and regardless of which social security scheme they contributed to. Refugees or recognised stateless persons living in the European Economic Area can, too. You must have worked in Belgium for at least one year to be eligible for a pension.
What about non-Europeans?
Thanks to bilateral social security treaties, citizens of the following countries can still access their pensions if they leave the country: Algeria, Canada, Chile, Israel, Bosnia-Herzegovina, Croatia, Slovenia, Macedonia, Yugoslavia, the Democratic Republic of Congo, Morocco, Poland, San Marino, Tunisia, Turkey, the US and Switzerland. In most of these cases, widows and widowers may also receive survivors' pensions.
Each bilateral treaty has different characteristics, so it is a good idea to check them with the relevant embassy.
What about other nationalities?
At present, people from countries not mentioned above can't access their pensions if they retire outside Belgium unless they adopt Belgian citizenship, which is a way around this obstacle.
Australia and Belgium signed a social security treaty late last year, which is due to come into effect on July 1, 2005.
Employees of Belgian companies cannot opt out of paying social security contributions, even if they know they won't be able to access their pensions when they leave the country.
How do I claim my Belgian pension from abroad?
Rules vary. In the European Union, when you apply for state benefits in the country where you live, you will be asked for details of any other countries where you have made social security contributions.
The state will pass details of your claim to the Belgian authorities, for example, who will work out what your pension would have been had you made contributions in this country for your whole career. It uses that amount to work out what you are entitled to, based on the number of years you worked in Belgium.
So if, for example, you worked for half your career in Belgium, the state would pay half the total pension it calculates you would normally get as your entitlement. The rest would have to be made up from other countries you worked in.
What about outside the European Union?
For most countries with bilateral treaties, you may simply request the application forms to apply for the Belgian pension from your state social security institution, which will forward them to the Belgian authorities. The latter will issue application forms which must be certified by the Belgian embassy in your country of residence.
In most cases, the pension will be paid in arrears at monthly, three-monthly or annual (in the case of small amounts) intervals into a Belgian or European bank account, if you have one, or by cheque or payable order.
As you near retirement, it is advisable to contact each country you've ever worked in for details of how to apply for your pension. Be aware that receiving pensions from abroad may affect any income support you are getting at home.
What about survivors' pensions abroad?
In any EEA country, if your husband or wife dies and you are entitled to a survivors' pension, that country will pass details of your claim to any country where your spouse paid social security contributions. Outside the EEA, in most cases, you must send a copy of their death certificate to the National Pensions Office in Belgium, which will then allow you to apply for the survivors' benefit.
Is there anything else I have to do to get my pension?
After retiring, you must complete and have legally certified the "proof of life" form sent to you annually by the National Pensions Office. You must also notify the Office of any changes of address, civil or employment status or adjustments to other benefits.
How much will my pension be?
Over-55s can get estimate of their pension entitlements from the federal Service Info-Pension on tel 02.529.25.31.
Where can I get more information?
Salaried employees should contact the National Pensions Office, Tour du Midi, Brussels, tel 02.529.21.11. The self employed should contact the National Institute for the Social Insurance of the Self-employed, 6 Place Jean Jacobs, Brussels, tel 02.546.42.11.