BELGIUM – Belgium has voiced its disapproval over European pension reform, citing a compromise over proposed investment rules that it says it “cannot endorse”.

The move stems from its opposition to proposed investment rules contained in the so-called ‘common position’, the revised form of the European Council of Ministers’ proposals on pension reform that is currently working its way through the European Parliament.

Belgium has taken issue with proposals to add a quantitative element to the directive. The text of the directive as it stands explicitly favours the so-called “prudent person principle”.

But the text also includes apparently contradictory measures that allow a quantitative approach. It states: “Member states may, for the institutions located in their territories, lay down more detailed rules, including quantitative rules, provided they are prudentially justified to reflect the total range of pension schemes operated by these institutions.”

Belgium’s response has been to voice its disapproval of the proposals.

“Belgium states that it cannot endorse the text of the proposal for a directive as contained in the compromise which the presidency has submitted to the council,” Belgium says in a statement, buried in an appendix to the common position paper.

It adds: “Belgium considers that, owing to the shortcomings in quantitative rules, the security of operations in the context of cross-border membership cannot be guaranteed, and as a consequence Belgium cannot subscribe to the principle of mutual recognition that this involves.” It states that the cost of any failure would be borne by the member state in which the commitment is made.

Henk Becquart, an advisor to Belgium’s pensions minister Frank Vandenbroucke, confirmed Belgium’s opposition to the directive. He said: “The directive doesn’t provide a good answer to the problems” of social provision.

Becquart stressed that Belgium does not want to block cross-border pensions. “I don’t think we will opt out of the directive.” He said Belgium was alone in abstaining because the directive as it stands would not have the same impact on other countries such as Germany and France.