Pensions consultants in Belgium are doing a swift trade. The Belgian parliament approved new legislation on supplementary pension last May. The new law, which takes force in January, is far-reaching, and pension schemes have called in consultants to deal with its implications.
“There’s a lot to do, and it affects different levels,” says Paul Roels of consultancy Integrale. The legislation affects both benefit design and the financial side, because of the minimum guarantee which is being introduced for defined contribution schemes, he says.
Jos Verlinden, director of M&P Consult, predicts that consultants will have a lot of work, not just now, but over the next three years because of the new legal situation. “Almost every pension fund will have to be reviewed,” he says.
Among the host of pensions aspects covered by the legislation are opting out opportunities, employee involvement in company pension plans, new rules on DB and DC plans, better communication to employees, constraints on individual pension promises and new fiscal measures. But most importantly, the lawmakers have paved the way for the new sector or industry-wide pension plans, as part of the drive to ensure that second pillar provision is available for everyone.
The new sector plans that are now emerging will develop into a large business for consultants in Belgium, says Verlinden. This work will be more focused on benefit design, he says – an area that his firm is not involved with.
It is not just the initial flurry whipped up by the incoming legislation that will keep consultants occupied – there will be an ongoing increase in the need for their services, says Yvo Vermeylen of Conac. “The new law will increase the administrative obligations, so consultants will have to work more.”
Apart from the new law, there is an increasing trend in Belgium towards members taking legal action against pension schemes. So the nature of consultancy in the country has changed, says Roels, with a greater need for legal advice. “A couple of years ago, lawyers were not involved… but now there are more and more court cases involving pensions,” he says.
Finance departments within companies also have their work cut out for them with the changeover in accounting standards to IAS 19. The new IAS rules particularly affect companies which have defined benefit plans and cash balance plans with guarantees.
One of the issues that Belgian consultancies are helping pension fund clients get to grips with are the low funding ratios now dogging some of them as a result of the negative investment results over the last two to three years. Consultants, says de Ryck, are following this closely, as well as looking at asset allocation.
Risk management is a service which is now increasingly called for by Belgian pension funds, he says. Consultants are also being called in for benefit design, as well, particularly with the new law coming into force. There has been less manager selection going on in the last two years, though this is now catching up, but with some way to go before it reaches the levels it was at in the days of the bull market.
When pension funds are looking for a consultant, there are compelling reasons for them seek out firms with local expertise. “We think funds favour the local consultants, but it is not clear cut,” says de Ryck. But in any case, most consultants, says Verlinden, are affiliates of international firms, and these take 70% to 75% of the market.
Although others offer advice to pensions, they do not pose a real competitive threat. On a local level, some of the banks and other institutions do try to offer advice alongside their investment products, but not with much success, says de Ryck. “Clients are very well aware that they are not independent.” There may be some smaller clients, however, who do get advice from banks, but these are not the size of pensions operations that would use a consultancy like Pragma anyway, he says.
Pragma hasn’t felt any sign that pension funds are resistant to the fees that consultants charge, despite the market weakness which has eroded their asset bases. “As clients have become a bit poorer, they are more than ever requiring value for money – that’s obvious.”
Do Belgian pension clients prefer to stick to one consultant long-term, or buy advice on a more ad-hoc basis? Firms differ in their experiences. It does happen now and then, says de Ryck, that a pension client requires one-off advice on a particular area, but the overwhelming portion of Pragma’s business is with clients who are looking for an ongoing relationship with a consultant that can sort out the whole range of needs. This is the type of business that the consultancy is most interested in getting, anyway.
“Especially now with downside risk and volatility – I think they appreciate that we are there.” And with this type of relationship, the added value is there over time in the small adjustments that are made – not just the hiring and firing, he says.
But Verlinden says he doesn’t have the impression that Belgian pension funds are looking for a one-stop shop in a consultancy. “They want one that can provide the best expertise,” he says.

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