PUBLIC SECTOR PENSION SCHEME OF RSZPPO - ONSSAPL Country: Belgium. Database Update: July 2009

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1 PUBLIC SECTOR PENSION SCHEME OF RSZPPO - ONSSAPL Database Update: July 2009 Name of Scheme: PENSIOENSTELSEL VOOR DE VASTBEEMDEN VAN DE LOKALE BESTUREN PENSION SCHEME FOR STATUTORY WORKERS IN LOCAL PUBLIC ADMINISTRATIONS Managing Institution: Rijksdienst voor Sociale Zekerheid van de Provinciale en Plaatselijke Overheidsdiensten (RSZPPO) - Office National de Sécurité Sociale des Administrations Provinciales et Locales (ONSSAPL) - Landesamt für Sozialsicherheit der provinzialen und lokalen Verwaltungen (LSSPLV) - NATIONAL SOCIAL SECURITY OFFICE FOR THE PROVINCIAL AND LOCAL PUBLIC ADMINISTRATIONS Address: Jan Gysen - General Administrator - Jozef-II-straat 47, 1000 Brussels, BELGIUM Web site: AND

2 1. DESCRIPTION OF THE SCHEME Scheme features Basic or supplementary? (Please, choose one) Basic. Supplementary. Combination of both systems Compulsory or voluntary? (Please, choose one) Compulsory. Voluntary. Combination of both (i.e. compulsory membership with possibility of a supplementary voluntary insurance; see ) Governed by: (Please choose as adequate) Law. Collective agreement. Both. Others (please specify): Please, indicate legal basis or collective agreement: Act of April 25, 1933 on the pension scheme of the municipal staff, the Royal Decree No 491 and the Royal Decree of December 26, 1938 on the pension scheme of the municipal staff. Act of August 6, 1993 on the pensions of the staff appointed by local authorities System classification: a. Please choose one: Defined Benefit (DB). Defined Contribution (DC). Mixed b. Please choose one: Pay As You Go (PAYG). Funded. Hybrid

3 1.1.4.c. Method of acquiring rights (Please choose one): Points Annuities Other (please specify): accrual rate Taxation principles (regarding Contributions/Returns/Benefits): EET (Exempt/Exempt/Taxed). ETT (Exempt/Taxed/Taxed). TEE (Taxed/Exempt/Exempt). Others (please specify): Fiscal advantages (for employers, employees and for the pension institution), if any apart from the ones mentioned in : FISCAL ADVANTAGES FOR THE EMPLOYERS ARE ALREADY TAKEN INTO ACCOUNT BEFORE THE CONTRIBUTION RATE IS SET ONLY A FEW TAX REDUCTIONS FOR PENSIONERS WITHIN CERTAIN CONDITIONS. THERE ARE FURTHER FISCAL ADVANTAGES IN FIRST PILLAR PENSION SCHEMES Legal position regarding EU legislation. Please indicate, answering yes/no, under which EU-legislation your scheme falls. The following classification maintains the current subdivision into three pillars: a. Regulation 1408/71(in the future: Regulation 883/2004) - statutory application of this Regulation or by notification of the Member State: b. Directives for supplementary pensions, such as Directive 98/49 EC, Directive 2003/41 ( Pension Fund Directive ), Proposal of a Directive to improve portability of supplementary pension rights COM(2005) 507 ( Portability Directive ): c. Life insurance Directives (in the future the Solvency II Directive ): - 3 -

4 1.2. Population involved Employers a. Who they are (e.g. ministries, public bodies, local governments, church staff, special entities employing teachers, police, fire-fighters, other particular entities for particular public services like energy, water, public transport, hospitals or childcare): LOCAL GOVERNMENTS AND LOCAL PUBLIC SERVICES - integrated police forces => Police pension scheme (pool 5) - administrative staff, teachers of municipalities and provinces => Local governments pension schemes (pool 1, 2) b. Number of employers: EMPLOYERS FROM WHOM WITH STATUTORY WORKERS Employees a. Staff working for the above mentioned employers indicate if there are particular conditions like specific status, minimum working time, specific labour contracts minimum age for membership? STATUTORY WORKERS: Employees must be appointed on a permanent basis (permanent staff) or be on preappointment probation period. Public sector employees who are not appointed on a permanent basis (contract, temporary staff) are covered by the general scheme of Social Security b. Number of active employees: EMPLOYEES FROM WHOM STATUTORY WORKERS c. Number of retired employees: (treated by PDOS) - 4 -

5 1.2.2.d. Number of former employees with deferred rights: unknown 1.3. Governance Decision-making body (Boards, trustees, etc, giving a brief description: number of components and their role, appointed and/or elected, renewal procedure ): The management board of RSZPPO is composed of 20 members representing employers organizations, employees organizations and the federal government. Every 6 years these members are appointed by their respective organizations. The Government Commissioners are appointed by the federal government. Regarding the pension schemes of RSZPPO, their main role is to set the yearly pension contribution rates Supervision (indicate the supervisory entities overseeing the scheme, if any, pointing out the nature of their supervision financial, legal ): The Management Board of the RSZPPO and mainly the Government Commissioners (supra) Basic financial data Income a. Global amount of contributions: - Police pension scheme: 0,4 billion employees + employers contributions - Local governments pension schemes: 0,8 billion employees + employers contributions b. Scheme s financial results, its return on investments in net/gross terms (for the last year, last 5 years, last 10 years, last 15 years, last 20 years, since inception as it results feasible) : NE - 5 -

6 1.4.1.c. Reserves (for funded schemes). If possible, including legal funding requirements, funding ratio : NE Expenditures a. Global amount of benefits paid to beneficiaries as defined in 2 to 6 (i. e. old age pension, disability pension, early retirement, survivors pension for spouse or children), in local currency and/or : - Police pension scheme: 0,4 billion - Local governments pension schemes: 0,8 billion b. Administrative costs (if mentioned in Annual Report can be expressed as an amount, a percentage of the capital, a percentage of the total annual contributions, a percentage of the annual benefits, or any other figure): INFORMATION TO BE DISPLAYED c. Other expenses (if representative): INFORMATION TO BE DISPLAYED Asset Allocation (roughly, as a percentage with no decimals): a. Fixed Income: 0% b. Equity: 0% c. Real Estate: 0% d. Cash: 0% e. Others (specify if you consider it necessary): 0% TOTAL: 100% - 6 -

7 1.5. Contribution rates Employers: a. Is the contribution a percentage of a base? YES b. If so, which base is the contribution calculated upon? QUARTERLY EARNINGS OF THE EMPLOYEE c. If not, how is the contribution calculated? / d. Is there a ceiling for the amount of the contribution? e. If so, how is it calculated? f. Is the contribution compulsory? YES g. If so, is there any additional requirement (e.g. it must be the same amount as the employee s contribution, or there is a vesting period, or )? Employees: a. Is the contribution a percentage of a base? YES b. If so, which base is the contribution calculated upon? QUARTERLY EARNINGS OF THE EMPLOYEE c. If not, how is the contribution calculated? d. Is there a ceiling for the amount of the contribution? - 7 -

8 1.5.1.e. If so, how is it calculated? f. Is the contribution compulsory? YES g. If so, is there any requirement (e.g. it must be the same amount as the employer s contribution, or there is a vesting period, or )? Possibility of paying additional/optional contributions: a. The scheme admits (tick as appropriate): AVC (Additional Voluntary Contributions) Deferred compensation (part of the salary is transferred into the pension scheme in order to buy additional pension rights) Purchase of Additional Points Others (please specify): POSSIBILITY OF PAYING ADDITIONAL /OPTIONAL CONTRIBUTIONS b. Are the optional contributions administered separately? / c. Indicate if the survivor coverage is subject to voluntary contribution (see 5.1): / - 8 -

9 1.6. Purchase of extra years / validation of past services Extra years: a. Is it possible to buy extra years (e.g. a person works for an institution during the fifteen years prior to retirement, while he is 50 to 65 years old; the institution s pension scheme could require a twenty years contribution in order to get a partial pension, or a full pension, or Is it feasible to buy -pay for them, usually after an actuarial calculation- the needed extra five years? Or even some more if the person wants to increase their pension?)? YES - only in case of voluntary career interruption b. If so, how is it done? 7,5% on missing salary (first year free + maximum 4 years validation OR first 3 years free if children<6 years old + maximum 2 years validation) Past services: a. Is it possible to validate past services (e.g. a person works for an institution during fifteen years but has not joined its pension scheme; after this time, she/he decides to join the scheme: Is it possible to make up for the unpaid contributions of those fifteen years?)? b. If so, how is it done? 1.7. Portability Is it possible to execute transfers to the scheme? Are transfers taking place at present (if they are possible and they are not being carried out, please explain why)? If transfers are possible, describe briefly transfer conditions and process (please differentiate among national and cross-border level whenever it is feasible and relevant): - 9 -

10 2. OLD AGE PENSION. 2.1 Qualifying conditions Retirement age: a. Legal compulsory age: Limit retirement age for State employee is b. Scheme compulsory age: idem c. Minimum age: The normal age is 60 for most employees who have completed their career after 31/12/1976 without being dismissed d. Maximum age: = legal compulsory age e. Average age: = f. Are there different rules regarding certain groups (women/men, employed/unemployed, disabled persons )? If there are, please describe: For certain categories of police staff, Qualifying period: a. Minimum period of membership -and/or at work in case it is relevant- (in years): 5 years according to Art 46 of the law of 15/5/1984. (previously 20 years). Since 1/1/1984, part time services are converted in full time years according to a pro-rata-calculation b. If it exists, please indicate if it is in the process of decreasing or increasing:

11 2.2. Calculation method DB scheme a. Calculation formula: P = S x N x accrual rate Where : P = Pension S = Annual average salary of the last five years N = Number of years of service taken into account (including notional years). Accrual rate = The value of the pensionable year is generally 1/60th of the pensionable salary. This percentage can be more favourable for certain professional categories: - /55th for service completed in the education sector other than university. -1/50th for active service (hard jobs) and for police staff and firemen. - 1/25th : for the first 15 years completed as a District Governor or Deputy-District Governor. - 1/12th for first 7 years as Province Governor and deputy Province Governor b. Brief description of the elements used in the formula (if they are not used, simply delete as adequate; if it is not considered, simply add it in the Others section): - Pensionable salary: Pensionable salary is the average index linked salary of the last five years of the career, revaluated on the date of pension entitlement (final salary for army staff). Only bonuses and extra payments provided by law are taken into account for contributions and pension calculation - Accrual rate: see above - Vesting period, if any: none - Minimum working time, if any: see retirement age - Minimum number of years guaranteed, if any: none - Maximum number of years, if any: none - Minimum age, if any: see retirement age - Maximum age, if any: see retirement age - Others:

12 2.2.1.c. Consequences of early/late retirement: none DC scheme / or NDC (notional defined contribution) scheme a. Is there a guaranteed return? b. Please indicate the existence of any of the following (for any points not considered, simply delete as appropriate; if any points are not included, simply add it in the Others section): - Vesting period, if any: - Minimum working time, if any: - Minimum number of years guaranteed, if any: - Maximum number of years, if any: - Minimum age, if any: - Maximum age, if any: - Others: c. Consequences of early/late retirement: d. Extra information affecting the calculation (unisex/differentiated tables by gender, different calculation depending on age or seniority ): Pension amount a. Is there a minimum guaranteed benefit? YES The pension paid cannot be lower than the minimum guaranteed amount. This supplement is only granted for the main pension. The guaranteed amount varies according to the pensioner s personal situation and the cause of retirement: - For a single pensioner : 1, per month. - For a married pensioner : 1, per month. The guaranteed minimum calculation takes into account all other incomes : pensioner s and spouse s pensions, industrial injury allowance, disability pension, etc b. Is there a limited maximum benefit to be paid? YES The public sector pension cannot exceed ¾ of the pensionable salary, but with the bonuses it can reach 9/10. All pensions are submitted to a ceiling of 69, per year ( 5, per month)

13 Benefit payment/s: (please choose as adequate) Monthly payments. Lump Sum. Calculation formula: Bonuses (e.g. an extra payment at Christmas): Comments (possibility of various lump sums ): Benefit payment mechanism: (please choose as appropriate) Benefits are paid directly from the fund (e.g. as in a PAYG scheme). The individual economic rights add up to a determined amount which is converted into an annuity. Members are allowed to purchase annuities from a supplier. Comment on any other possibility: Nature of annuities: (please choose as adequate) Lifetime. Deferred. Variable. Comment on any other possibility: 2.3. Flexible or part time pension Can the pensioner continue at work while receiving a pension? Full time Part time No If so, what are the conditions to be met? a. Minimum age: b. Minimum period of membership/at work:

14 2.3.2.c. Others (fill in as you consider appropriate): Calculation of the pension (is any reduction factor used?): Is there a minimum pension? Is the pension received while working a monthly payment or a lump sum? Is there a pension abatement over a certain salary level? If there is such abatement, how is it calculated? 2.4. Indexation Kind of indexation: (please choose one) Price indexation. Calculation: Wage indexation. Calculation: Other indexation. Calculation: No indexation Conditions applicable to early leavers for the indexation of deferred pension rights (if any): 2.5. Distribution of rights in case of divorce: Are the pension rights split between spouses/partners in case of divorce? If it is so, please give a brief description of how the division is carried out:

15 3. DISABILITY PENSION Qualifying conditions: (please choose one) Notion of disability linked to job related incapacity (incapacity to carry out the usual job) Notion of disability linked to work related incapacity (incapacity to carry out any job) Others. Please explain: 3.2. Pension calculation: The calculation is the same calculation as for retirement pension? YES Are there any extra pension rights? Does the cause of the disability affect pension calculation (for example, does a work related disability provide better pensions)? Number of years of service taken into accoutn can be low

16 4. SURVIVOR S COVERAGE 4.1. Surviving spouse (or partner) pension Accrual of survivor s pension rights a. The survivor coverage is: (please choose one) Compulsory Optional b. At the time of accruing survivor s pension rights, are there different options/alternatives? Qualifying conditions (these ones or any other): a. Age: Before age 45 The surviving spouse aged under 45 is entitled to a minimum fixed pension, unless there is a dependant child or if he/she has a permanent work incapacity of at least 66% (in other cases, he/she must wait for the age of 45). After age 45 There is no qualifying period if the deceased had already retired or if he/she was still in service at the time of death. If the member dies after leaving the public sector and before being retired, there is a qualifying period of 5 years of service b. Minimum marriage duration: Marriage must have taken place at least one year before the member s death, except for specific circumstances (if a child was born from the marriage, if death is due to an accident which occurred after marriage, or to an industrial disease, if, at the time of death, there was a dependant child for whom one of the spouses received child benefit)

17 4.1.2.c. Any other requirement: The surviving spouse or divorced spouse must not have been sentenced for making attempts on the member s life. The divorced spouse must not be remarried before the date of the member s death d. (Legal) Recognition of the following partnerships: (choose as adequate, as many as it is necessary) Spouses of different gender admitted (married). Spouses of the same gender admitted (married). Civil partners of different gender admitted (unmarried). Civil partners of the same gender admitted (unmarried). Couples of different gender with no legal liaison admitted. Couples of the same gender with no legal liaison admitted e. Divorced spouses/partners: e.a. Are they entitled to the pension? YES e.b. Is there any (legal) pension sharing mechanism between present and past spouses/partners? YES f. If a widow/divorced/partner remarries, does she/he lose any pension entitlement? YES g. Is personal income taken into account at the time of calculating the surviving spouse pension? YES, only retirement pension income

18 Calculation method (considering the different possible alternatives): P = S x 60 % x (T1/T2) Where: P = Pension S = Pensionable salary = average salary of the last 5 years T1 = number of months of service taken into account (actual and notional) T2 = number of months between the 20th birthday of the deceased member and the month of death (with a maximum of 480) Distribution of rights in the case of divorce a. Are the pension rights split between spouses/partners in the case of divorce? YES b. If it is so, please give a brief description of how the division is carried out: divorced partner gets P1 = P x duration of marriage / T1 surviving partner gets P2 = P - P1 but P2 cannot be lower than per month

19 4.2. Children pension Qualifying conditions a. Age limits: If there is no surviving spouse, dependent children are entitled to a survivor pension until they reach the age of 18 or as long as they are entitled to family allowances. Beneficiaries must not have been sentenced for making attempts on the member s life b. Time duration: see age limits c. Possible extensions and their causes (e.g. disabilities, studies ): see age limits: studies & disabilities give rights to family allowances d. Is personal income taken into account at the time of calculating the child pension? Calculation method: One child: 6/10th of the surviving spouse pension. 2 children: 8/10th of the surviving spouse pension to be shared between beneficiaries. 3 children and over: 10/10th of the surviving spouse pension to be shared between beneficiaries. Children pension are calculated on the basis of the surviving spouse pension. In the case death in service: If death results from an industrial injury or disease, a short-term allowance is granted to each child. It amounts to 15% or 20% of the salary according to the number of beneficiaries. But the total amount granted to all beneficiaries cannot exceed 45% or 60% of the above mentioned salary

20 5. ADDITIONNAL INFORMATION Comments on recent, ongoing or future reforms: at RSZPPO-ONSSAPL: none at PDOS: 1) Age bonus retirement pensions For all services completed after , a bonus is granted for each month completed after age 60. This bonus is calculated as follows: % of the annual amount of pension for each month of service completed between age 60 and 62 (with a minimum of 20.19) 0,167 % of the annual amount of pension for each month completed after age 65 (with a minimum of 26.92). The maximum bonus can reach 9 % of the pension amount as shown below: Age 60-61: Bonus per year= 1,5 % Age 61-62: Bonus per year= 1,5 % Total bonus= 3% Age 62-63: Bonus per year= 2 % Total bonus= 5% Age 63-64: Bonus per year= 2 % Total bonus= 7% Age 64-65: Bonus per year= 2 % Total bonus= 9% The working conditions bonus and the age bonus can be overlapped. Where possible, the pension level considered for the calculation of the age bonus is the pension amount including the working conditions bonus. 2) Proposal for the introduction of a supplementary pension scheme for contract workers in public sector 3) An ambitious National Pension Conference started in January 2009 (the Conference is still going on)

21 5.2. Comments on any of the previous sections (please include the section heading references): SECTION 1 - DESCRIPTION OF THE SCHEME: there are five pension schemes "pools" for statutory workers in local public administrations. In Section 1 we only consider Pool 1, 2 and Comments on any possible interesting information not considered in the questionnaire: Pool 1, 2 and 5, as referred to in Section 1, are the pension schemes for the local public administrations that are based on the repartition principle. We would like to briefly describe these pension schemes and the two others that exist for statutory workers in the local public sector in order to give you a better understanding. The RSZPPO recovers pension contributions for statutory staff that are members of a solidarity pension system of local governments. These pension schemes operate on the repartition principle based on the solidarity principle. At present there are 2 pension schemes managed by the RSZPPO: the common pension scheme for local authorities (pool 1) and the system of the new National affiliates (pool 2). These two pools are separately managed. A connection to one of these two pensions is irrevocable. The local administrations, which are in Pool 1 and Pool 2 and for which the Pension Service for the public sector (PDOS) is responsible for the payment of pensions to their former statutory staff, can entrust the payment of pension contributions to a precautionary institution (= Pool 1bis and Pool 2bis). In the event that the Pool 2 connected local authorities entrusted the precautionary institution with the payout of the pensions as well, the pension contributions due, remain to the precautionary institution and are not materially transferred to the RSZPPO (= Pool 2ter). Since 1994: POOL 1 COMMON PENSION SCHEME Act of April 25, 1933 on the pension scheme of the municipal staff, the Royal Decree No 491 and the Royal Decree of December 26, 1938 on the pension scheme of the municipal staff

22 The local government may at any time connect with the common pension system. This connection applies only to staff appointed as statutory from the date of registration. From that date a pension contribution to the salary of his statutory staff involved in this system, is due by the local authority to RSZPPO. The contribution rate for the common pension scheme is fixed at 27.5% for the years 2008 and 2009, with a contribution of 7.5% borne by the employee. POOL 2 NEW AFFILIATES TO THE NATIONAL OFFICE The Act of August 6, 1993 on pensions for the statutory staff of the local authorities. This connection applies to all, at the time of connection, statutory staff of the local government and their future retirement and survivor pensions are borne by this system. Part of the pension cost that started before the year of registration and any pension granted from the year of affiliation are also borne by this scheme. The proportion of current pensions to be transferred is individualized for each administration. From the date of joining, a pension contribution to the salary of his statutory staff involved in this system, is due by the local authority to RSZPPO. The contribution rate for this system is fixed at 34.5% for the years 2008 and 2009, with a contribution of 7.5% borne by the employee. POOL 3 PRECAUTIONARY INSTITUTION The local governments that do not belong to Pool 1 and Pool 2 can, by contract, appoint the management and payment of the pension of their statutory staff to a precautionary institution. These institutions are established for the management of the collective retirement and survivors pension funds. They have signed an agreement with the local government for the provision of pensions of their statutory staff and their dependents. POOL 4 OWN LOCAL PENSION SCHEME The local governments that are not connected to an RSZPPOpension scheme or a precautionary institution can decide on the own financing of their pensions. The local government can opt for a system of repartition, for a form of capitalization (which involves the creation of reserves) or a mixed system. The government itself conducts the management and payment of

23 pensions. They can decide at any time to connect their statutory staff, either to the system of the new National affiliates (Pool 2) or to a precautionary institution (Pool 3). Since the Police Reform in 2001: POOL 5 PENSION SCHEME FOR THE INTEGRATED POLICE This pension scheme was established on April 1, 2001 and is financed with pension contributions at the salary of all statutory local police staff. The Management Board of RSZPPO has fixed set the rate of this pension contribution for the years 2008 and 2009 set at 27.5%. The payment of the pensions in Pool 1, 2 and 5 are entrusted to the Pension Service the public sector (PDOS), which also is responsible for the calculation of these pensions Comments on any possible restriction on the information to be displayed (e.g. section 1.4. to be accessible to other EAPSPI members only, or to the General Secretariat and Board only, or we will not answer that section as we consider it is for the member s internal use only, or to be used for statistical purposes only ). If nothing is declared, the General Secretariat understands that the authorisation to use and display the information is given, always limited to it being used according to the aim and mission of the EAPSPI, and for no commercial use of any kind: Section 1.4: the basic financial data are only for internal use. As for the in Section 1 mentioned pension schemes, the PDOS (The Pension Service for the Public Sector) is responsible for the payment of pensions. Therefore the information in Sections 2, 3 and 4 has to be provided by PDOS