Good news for the lowest pensions in our country. The texts on increasing statutory minimum pension for employees and the self-employed by 1.9% were approved on 13 July 2017. The IGO (Income Guarantee for the Elderly) is also increasing by 0.9%.
More specifically, this will mean €1,212.45 per month for a single retired person who has worked a full career as an employee, or €1,515.00 per month for a family pension, as from 1 September.
There is also good news, albeit relatively so, for ‘higher pensions’. The pay ceiling on which our statutory pension is calculated will also increase by 1.7% for salary earners and the self-employed. The basis on which our statutory pension is calculated will namely be capped at a maximum annual amount of €54,648.70 for salary earners and €66,658.52 for the self-employed. Although the portion of your salary in excess of this amount does not confer any right to statutory pension, social security contributions are still paid on the full amount for salary earners: the solidarity principle. As these limits are now being raised, these citizens will also see their pension entitlements increase.
This might also have consequences for the calculation of company pension (2nd pillar). If the formula of the company pension plan takes the statutory pension ceiling into account, this could affect the second-pillar pension both positively and adversely. However, many companies have excluded this uncertain factor from their pension plan and defined their own fixed-pay platform (or several platforms).
An increase of the statutory pension also leads to a reduction of the tax margin for supplementary pensions under the 80% rule. If pension planning is optimised, this could thus result in pension contributions having to be reduced.