The Belgian Association of Pension Funds (BAPF) has set out its stall in anticipation of the government legislation review.
The association, which represents 100 pension funds valued at BFr400bn (E9.9bn)is lobbying against complexities in the current system, which it notes is not neutral in the treatment of pension providers.
Karel Stroobants, president of the BAPF, says pension funds are presently covered under legislation for ASBL’s (Association Sans But Lucratif) – charitable status, which means they have to pay a withholding tax as well as an overall tax on assets.
Insurance companies, he notes are legislated under company law where the same rules do not apply.
“Pension funds can avoid this tax by investing in mutual funds, but this turns the whole issue of asset/liability management and then deciding whether a mutual fund is the best formula, on its head. Pension funds are forced to choose mutual fund status from the beginning.” Stroobants says he believes that the government will render the present situation more homogenous in its legislation.
While the association says it is in favour of a level playing field, it is also asking for bespoke legislation, which would no longer make it an appendix to the insurance regulator. Pointing to the key criteria of security, complementarity, transparency, accessibility, efficacy and accessibility, the BAPF says membership protection should be a cornerstone of any law.
Particular attention, it says, should be paid to investment charges and the professionalism of management. “This should be as affordable for employers as it is for public bodies.”
The association has also flagged up the need for prudence over investment risk for poorer workers, saying that responsibility should only be placed on the individual where appropriate information and education are provided.
On tax – it believes that contributions should be fiscally exempt – while they are not a revenue and cannot be realised until retirement. Instead, pensions payment should be taxed.
The association is also throwing its weight against ceilings on pension bonuses as well as any attempt to create ‘globalised’ deduction rates for second and third pillar funds.
In a bid to clarify the tax idiosyncrasies of the Belgian retirement system, the BAPF has also published a book entitled: “La Fiscalité des Fonds de Pensions et institutions simulaires.” Details from the BAPF (+322) 514 5656.