In Belgium, a statutory minimum return applies to all premium payments in a second-pillar DC (defined contribution) plan, under the Supplementary Pensions Act (the so-called WAP return). This return is variable: it is calculated on 1 June every year and applies for the following year. The interest rate has a minimum value of 1.75% and a maximum value of 3.75%.
The WAP return is calculated as the average rate on the 10-year Belgian OLO (linear bond) over the last 24 months, multiplied by 85% and rounded to the nearest 25 basis points (bp). Since the introduction of the variable calculation method, this WAP return had been 1.75%, but it rose to 2.50% in 2025.
The interest rate on these 10-year OLOs is directly linked to Belgium’s creditworthiness. As a result of the fall in Belgium’s credit rating, the interest rate on these 10-year OLOs is expected to remain high for a long time. This has a direct impact on the WAP return.
- Currently, the 24-month average on Belgian OLOs is 3.13%. When this is multiplied by 85% and rounded to the nearest 25 basis points, this gives a WAP minimum return of 2.75% for 2027 – up 0.25% on the previous rate.
- At the end of last week, the interest rate on 10-year OLOs was 3.56%. We can expect a slight upward pressure on this 10-year rate.
By comparison, Fitch’s credit rating for Belgium was downgraded from AA- to A+ on 13 June 2025. At that time, according to the daily market rates records, the Belgian 10-year rate rose from 3.03% on 12 June to 3.11% on 13 June – approximately +8 basis points on the day of the downgrade.
Although a large jump in the 10-year rate as a result of this drop in creditworthiness is unlikely, it will exert constant upward pressure on interest rates. Macro, budgetary and liquidity factors also typically carry significant weight. Interest rates can therefore expected to stay high in the near future. If the current interest rate of 3.56% persists for a long period, the WAP return could rise to 3% in 2028.
The expected rise in the WAP return means this is a good time for employers to take a critical review of the financing of their second-pillar pension plan again. By responding to it in good time, they can assess whether their current financing model is still optimally aligned with their targets and with evolving market conditions.
Tip: A switch to collective financing, such as Branch 23 or a multi-employer pension fund, could be an attractive alternative for plans in Branch 21. For plans with existing collective financing, a review of the asset mix could also offer an opportunity to strive to achieve the WAP return in a sustainable manner.
Get in touch with your regular contact person at Employee Benefits or via ebservices@vanbreda.be.
