BELGIUM - The head of the Belgian pension fund association has responded with bewilderment to comments yesterday by the Dutch central bank warning funds about the dangers of going across the border to their neighbour.

"I read the Financieele Dagblad daily and what I see is sloganesque language which is not true," said Philip Neyt - one of the driving forces behind Belgium's push to become a pension domicile under the EU's Institutions for Occupational Retirement (IORP) directive.

Dirk Witteveen, executive director of De Nederlansche Bank said yesterday that Belgium was trying to "sell a car without having the technical specifications yet".

"We won't react in the same way," Neyt said. "I find it very strange how the Dutch are reacting to the way we implemented the directive. It seems very protective and it gives me the impression that our system must be very good."

"After 10 years of negotiations we finally have a European directive and now the Dutch are criticizing the country that was probably the first to implement it fully," Neyt said.

"Our legislation was drawn up in negotiations with large multi-nationals including Dutch multinationals."

He said he was calling on all companies and consultants to challenge regulations and check which pension solution is best for them and their beneficiaries.

"For me it seems that pension funds in the Netherlands and the UK are slightly overregulated. Not for the benefit of the employees but for the benefit of the regulators," Neyt explained.

"If the regulator is too stringent and does not take into account the time horizon of the investment than most CFOs will say that the pension plan has become too expensive and change it. Under IFRS CFOs have a much better view on pensions than in the past."

He stressed that the Belgium regulation was deliberately more flexible than other pension legislation - but ensuring prudence - because "one size does not fit all". Neyt also rectified Dutch claims that there was an automatic discount at 6% on all pension schemes in Belgium. "This is not true, the regulator will be looking at each pension fund individually.

Henk Becquaert, head of the pension department in the Belgian supervisor CBFA, said: "Belgium implemented the directive by letter and spirit and has therefore decided not to impose more quantitative requirements than the ones minimally foreseen by the directive".

He added that the basis of the directive was "mutual recognition of supervisory principles applied in member states, if transposed correctly".

Regarding the Belgian regulatory framework the CBFA representative pointed out that the International Monetary Fund (IMF) had found the supervisory standard to be high and the CBFA to have "the appropriate competences to guarantee supervision".

All changes to the pension supervision proposed by the IMF "have been taken into account in the new regulatory and supervisory framework," Becquaert explained. He added: "Pension funds came under supervision in 1986 and since then no bankruptcy has been filed."

Among other things Belgium "reviewed its rules on the calculation of technical provisions in order to be compliant with the Directive, shifting from a quantitative approach to a qualitative one". By law "technical provisions must be sufficient to cover all liabilities in a wind-up situation".

Currently, the CBFA "is finalizing principles of good governance, largely inspired by the existing CBFA rules for the other supervised institutions as well as by the OECD Guidelines for pension fund governance", Becquaert stated.

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