A comparative analysis of the information duties in Belgian and American occupational pensions
| Published date | 01 March 2020 |
| Date | 01 March 2020 |
| DOI | 10.1177/1388262720912850 |
| Subject Matter | Articles |
Article
A comparative analysis of
the information duties in
Belgian and American
occupational pensions
Marjolein Denys
Lawyer at the Brussels Bar, Belgium
David Pratt
Albany Law School, NY, USA
Yves Stevens
Institute of Social Law, KU Leuven, Belgium
Abstract
Both the United States of America and Belgium attach great importance to communication duties
in occupational pensions. Several legal sources in both countries provide the right to be informed
to participants. The legislation in both countries seeks to ensure accurate, correct, transparent and
understandable communication. Despite this resemblance, there are some differences in com-
munication. The countries can learn from one another. Based on a theoretical framework
developed in and for the European Union, the communication rights and duties in the USA and
Belgium are analysed. This analysis leads to a better understanding of the different legal respon-
sibilities, transparency rules, simplification efforts and technical correctness of the types of
occupational pension information analyzed.
Keywords
occupational pensions, information, Belgium, USA, open norms, (fiduciary) duty to inform and
disclose
1. Introduction
Pensions form an important element of social protection for many individuals. But few people fully
grasp and understand their pension scheme and the intricacies regarding the composition or nature
Corresponding author:
Professor Dr. Yves Stevens, Institute for Social Law, KU Leaven, Blijde-Inkomststraat 19 Box 3409, 3000 Leuven, Belgium.
E-mail: yves.stevens@kuleuven.be
European Journal of Social Security
2020, Vol. 22(1) 39–63
ªThe Author(s) 2020
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DOI: 10.1177/1388262720912850
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of the pension calculation. Despite their importance, and even after decades of increasing infor-
mation awareness about the topic, pensions remain an enigma for many. This is true both for
statutory pensions (first pillar), occu pational pensions (second pillar) and individual pensions
(third pillar). In the last decade, awareness of the effects of financial illiteracy has risen worldwide.
Nobody any longer questions the need to provide clear, accurate and understandable information
for pension plan participants and their beneficiaries. The discussion now focuses on the scope, the
depth, and the importance of the information and this can vary easily between pension types.
When it comes to occupational pensions, the need to inform participants is often considered
crucial, seemingly more important than in statutory pensions. This difference in perception has to
do with the very nature of occupational pension plans. They are not only administered by private
pension providers rather than governmental bodies, but these plans are often part of the employ-
ment contract. Thus, they are captured in a legal construction with the three parties involved: the
employer (or in some countries the branch of industry), the employee and the pension provider. It is
well known that legal constructions involving three parties are often far more complex than those
involving only two parties because rights and obligations have to be balanced between the three
parties involved. This is the case concerning the rights and obligations in occupational pension
plans. Hence, the information regarding occupational pension plans and the understanding of this
information in all its aspects and im plications is crucial and necessary for the definition and
awareness of the rights and obligations of all involved.
This article focusses on occupational pensions and the intrinsically linked communication
duties in the USA and Belgium. The choice of these two countries is not random. The justification
is twofold. First, the basic social security schemes for old age are, from a legal point of view, very
similar in both countries. The schemes are work-related, not means-tested, contributory and quasi-
compulsory for all working people, and rights are clearly defined in law.
1
Furthermore, there are
very similar income replacement rates in old age in b oth countries regarding statutory social
security pensions.
2
Hence, the starting point or basis of comparison is similar. Secondly, occupa-
tional pensions are very well developed in the USA (at least from an economic point of view). In
Belgium, occupational pensions are a rather new feature in a compensation and benefit plan for
employers. So, the question arises of how the relative neophyte is doing compared to the ‘old hand’
when it comes to the communication aspects of occupational pensions.
3
Both Belgian and American legislators recognised the importance of correct information and
have translated this into occupational pension information policies. First of all, different docu-
ments and materials exist on different levels to provide information about occupational pension
information. Furthermore, both groups of legislators created so-called ‘open norms’. These
norms require that the pension information should be clear, accurate and understandable.These
1. For a full overview of the American and Belgian systems, see the respective websites of the social security adminis-
trations (USA: www.ssa.gov and Belgium: www.socialsecurity.be). Both countries also adopted an old age policy with a
similar view: poverty alleviation amongst the elderly and income replacement after retirement.
2. The average gross pension replacement rate from the mandatory public scheme is 48.3%of individual earnings at
retirement age in the USA and it is 47.7%in Belgium. See: OECD (2018: 163).
3. An interesting detail in this comparison is that almost all ‘older’ occupational plans on a company level originate from
American companies. Thirty to forty years ago, American companies started with the first occupational pension plans in
Belgium. There has been a clear American influence in HR matters due to the sheer size of some of these companies that
brought along the American way of compensating employees. On the origin of these plans, see: Carton de Tournai and
Deleers (1965: 30).
40 European Journal of Social Security 22(1)
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