BELGIUM – Agoria, formerly FabriMetal – Belgium’s first sector-wide pension fund, for employees working in metal related industries, will begin transferring BFr2bn in assets to four money managers next month, in a move which will be scrutinised by other industry sectors in the country considering creating pension funds on the back of the recently approved Vandenbroucke law.

Agoria, which represents around 2,000 firms with 150,000 employees, has chosen four managers to begin investing the assets for its fledgling fund; Belgium’s KBC Asset Management, AXA Investment Managers in France, Cordius Asset Management in Brussels and Bank Nagelmakers, with State Street selected to provide the fund’s custody.
Fritz Potemans, an advisor at the Agoria fund, comments: “ They have mixed mandates at this moment, not specialised, with 40% in equities and 60% in bonds.
“ But in a few years we expect to switch to 60% shares and 40% bond mandates with more specialisation.”

Potemans says AXA and KBC will both manage one third of the fund’s assets with Cordius and Nagelmakers receiving one sixth each.
New incomes will be transferred in the same way, he notes.
“ We are in the last stages of signing the contracts so I guess we will start the placements at the beginning of May.”

The former FabriMetal changed its title to Agoria in November last year to reflect the fact that the sector contain not just metalwork companies, but IT and technology firms.

The fund is also to raise its employer contributions rate from 1% to 1.5%, following the current round of wage negotiations:“ In the future we will go a bit further of course but in this period we have agreed on the 0.5% rise,” adds Potemans.

Potemans says he sees a number of other sectors considering the implementation of pension funds, but that it will take time for them to come to fruition: “ What I see is that some sectors, particularly those related to the metal sector, such as the automobile repair sector are looking at starting their own sector funds in 2002.
“ The largest sectors don’t want to do it at this moment, because they are waiting for the legislation to appear in its final form, and there are still some final technical problems to be resolved.”
Belgian sectors already cited as looking closely at the pension issue include the textile and chemical industries.

One problem, he notes, is that Belgian social affairs and pension minister Frank Vandenbroucke, has said pension contributions will fall outside the margins of salary discussions: “This is a problem for most of the sectors because they are already hemmed in with a lot of other things and could make it difficult to introduce pension funds.”

And he adds that while the 3.25% guarantee rate in the new law will not be a long-term problem, it could pose problems over the short-term: “If you have the profile of a pension fund where a lot of people are leaving in the next few years and then you have to guarantee 3.25% and the market is very negative, this will be very difficult.”

He also highlights a potential pitfall in the exemption from the 3.25% rate for new schemes in the first five years, where a guarantee only has to be made against inflation.
“ Inflation can be higher than 3.25% of course, so at least want we want to see is an inflation link with a maximum of 3.25%.

Other sectors, he believes will wait and learn from the experience of Agoria before implementing sector funds, despite the fact that wage negotiations in some sectors are still going on at the moment in Belgium.
“ I think the social partners will prefer to see the full legislation and start in two years time at the next round of talks.”