Workers today are aware that their state pension will no longer be sufficient for them to maintain their standard of living in retirement. So they would particularly welcome the chance to pay into a supplementary pension offered by you. You can choose to offer them one of two pension types: pension insurance or a pension fund.
A pension fund (second pillar) allows an employer or business sector to self-manage the pension premiums they pay on behalf of their staff, as part of an independent structure. In Belgium, this type of structure is called a "Pension Fund Body" (OFP: Organisme voor de Financiering van Pensioenen / Organisme de Fonds de Pension) .
How does it work?
- You create an OFP that legally separates pension management from the management of your business.
- You decide for which activities you wish to retain responsibility, and which you wish to delegate, e.g. administration, communication, accounts, asset or actuarial management, etc.
- Based on the pension plan’s features and your current pension obligations, you set the pension fund investment strategy with a view to meeting predefined objectives (such as providing a guarantee of a minimum return for beneficiaries).
- You regularly re-examine and re-assess the OFP's strategy and structure in order to be sure that the objectives will be reached.
- A flexible solution: you enjoy a great deal of freedom regarding the objectives and investment strategy you set, as well as all the other aspects of your second-pillar pension plan. This means you can create a pension fund that reflects your company's values.
- Transparency and control: you take charge of building your employees' pension funds, thus fulfilling your obligations to them as their employer.
- Employee motivation and loyalty: staff welcome the provision of a supplementary pension, which is part of a motivational Human Resources (HR) policy. It is even an important factor in attracting new staff.
- Favourable taxation: both for you and for the beneficiaries.
Good to know
- The law of 27 October 2006 stipulates that this type of investment vehicle must take the legal format of an OFP (Pension Fund Body).
- The fund can be jointly administered.
- Just as for any other investment solution, you remain responsible for achieving the minimum guaranteed return. You can, however, optimise your management.
- An OFP allows economies of scale that will be all the more financially rewarding since the annual amount paid in pensions and the number of affiliated individuals are considerable.