Liliane Bervoets, an 87-year-old Belgian retiree, today enjoys what she herself defines as a “worry-free” old age thanks to a monthly pension of 2,184 euros. However, she maintains a complaint that thousands of European pensioners share, and that is that the five years she worked as a teller, during which she contributed, did not improve her benefit. “I have worked and contributed but I receive nothing for it,” he laments.
The case, reported by the Belgian newspaper Het Laatste Nieuwsfocuses on the operation of the pay-as-you-go system, predominant in most of Europe. Unlike capitalization models in which each worker accumulates his or her own fund, in the pay-as-you-go system, current contributions directly finance current pensions. That is to say, there is no “individual piggy bank” that guarantees an exact correspondence between what was contributed and what was received.
Contributing does not always translate into charging more in the Belgian system
Bervoets was born in 1938 in the Flemish town of Burcht and experienced the fall of the V bombs in her village, which forced her to abandon her studies to help in the family business due to her father’s disability. After marrying in 1958, Liliane combined her family life with five years of work at Carrefour. Later, his working life was completed with an extensive local political career, which included 18 years as a councilor and five as councillor.
After the death of her husband in 2017, she began to receive a widow’s pensionthe main source of their current income. This type of benefit is calculated, in Belgium, based on the career and salary of the deceased spouse, not so much on the beneficiary’s own history. Hence, the years contributed by Liliane herself have a reduced impact or, in certain cases, are absorbed by the limits and compatibility rules of the system.
However, Liliane’s initial joy upon finding out how much she was going to receive in pension was short-lived. Shortly after, the pension service notified him that they would apply a withholding of 350 euros to avoid a high tax burden. In addition, they deducted another 100 euros related to her five years working as a cashier.
Labor economist Stijn Baert, professor at Ghent University, puts context to this situation: “Contributions made during working life are not saved for one’s own future, but rather finance current pensioners.” Thus, he emphasizes that “it is no surprise” that not all individual contributions translate into direct increases in the final pension, especially when derived benefits such as widow’s benefits come into play, as in the case of Liliane.
In addition, the expert highlights the limits to the accumulation of income. “The system establishes thresholds that prevent different benefits from being fully added,” he explains. This implies that, although a person has generated rights through different means, the final result may be cut to adjust to those limits.
The case also highlights the importance of the so-called second and third pillars of the pension system: business plans and private savings, which operate under capitalization schemes. According to the economist, the absence of this type of complementary provision can limit economic options in retirement. Although in the case of Bervoets, his financial situation in which he lives without paying rent, mitigates that impact. Despite her complaint, the protagonist relativizes her situation. “I’m lucky, I live well,” he admits.
Spain maintains the pay-as-you-go model, but with a greater link between contribution and benefit
In Spain, the pension system shares with the Belgian system its nature as a pay-as-you-go model, which implies that the contributions of current workers directly finance the benefits of retirees. However, unlike what Liliane perceives, in the Spanish case there is a more visible relationship between the years of contributions and the amount of the pension, since this is calculated based on the contribution bases and number of years worked. However, there are limits here too: to access 100% of the pension, a minimum contribution period is required, which in 2026 is around 36 and a half years, and very short working careers can have a small impact on the final result.
Furthermore, the Spanish system includes benefits such as the widow’s pension, which, as in Belgium, It is calculated primarily from the career of the deceased spouse. This can generate situations similar to that of Bervoets: the years contributed by the beneficiary have less weight if the rights derived from the spouse predominate and if limits or compatibility rules come into play.
In practice, this means that, even if you have been contributing for years, that effort does not always translate clearly into what you earn later. The system works as a common fund. Everyone contributes and from there the pensions are paid, so there is no exact relationship between what each person contributes and what they receive. Thus, part of what you contribute may end up having a less visible effect on what you earn, because the main objective is to guarantee income to all retirees, not to return to each person exactly what they contributed.