Belgium vets foreign applications as Dutch get twitchy
BELGIUM - The Belgian pensions supervisor CBFA is vetting the applications of five foreign pension funds which want to establish themselves in Belgium, the watchdog indicated.
"More schemes are in the phase of orientation," Henk Becquaert, CBFA's special representative, told IPE.
According to Becquaert, the main interest is from smaller company schemes and start-up pension funds in the new EU countries and from other member states which are to the "south and east of Belgium", he declined to mention country ames.
Earlier, the €14bn global pension fund of multinational company Nestle has publicly indicated its interest in Belgium as its operational base, Becquaert said.
As of 1 January 2007, Belgium has introduced new pensions legislation, which aims to be attractive for cross-border pension activities, as allowed by the European pensions directive. It is actively promoting the benefits.
Elsewhere, supervision director Klaas Knot of the Dutch pensions regulator DNB said that he has picked up signs of Dutch schemes considering transfer of their operations to Belgium, because of its more relaxed regulations.
"The DNB is putting pressure on fellow-regulators within the EU for harmonisation of European pensions supervision. This arbitral supervision is not in the interest of participants in pension schemes or other member states," daily Het Financieele Dagblad quoted Knot as saying.
The paper has calculated that the Belgian rules require a minimum coverage ratio of 70%, compared to 105% in the Netherlands. In addition, the mandatory financial buffers are considerably lower and the governance rules are much less strict in Belgium, it said.
Falco Valkenburg of consultant Towers Perrin in the Netherlands indicated that there was "considerable interest" in the Belgian system. He confirmed that his company is advising some multinational companies and an average-sized securities fund in the Netherlands on a move.
Contrary to the Dutch rules, pension funds in Belgium are allowed to keep their assets and administration together, while maintaining their own boards and arrangements, Valkenburg explained. "The benefits of scale can make a difference of €900 a year for each participant."
According to CBFA's Becquaert, pension funds, which want to settle in Belgium must be fully funded long term, adhere completely to the prudent person principle among other requirements. Additional hurdles might be national labour and social legislation and barriers for transfer of pension assets, he indicated.
So far, the Belgian regulator has not received applications from Dutch pension funds, or from Belgian schemes which intend to carry out activities for the Dutch market, its spokesman stated. "But I don't exclude any future interest from Dutch schemes."
"The situation should encourage the Dutch government to ease the rules on company pension funds, and to create the option of several company schemes in one pension fund in particular," Frans Prins, director of the Foundation of Dutch Company Pension Funds (OPF) commented. "Otherwise they might be tempted to move to Belgium."
In Prins' opinion, arbitral supervision is only part of the issue. "The supervision will converge eventually," he said.