BELGIUM - A 30-year pension fund administration tender by Belgian municipality Saint-Josse-ten-Noode has left observers confused.

The €6.7m (£4.28m) fund recently put out the brief, comprising financial, technical, actuarial and administrative management. The apparent 30-year duration for the contract contrasts with the average four-year term.

Karel Stroobants, pension expert and former president of the Belgian Pension Fund Association, said he thinks it is a very unusual and peculiar step. He told IPE: "I think they're confusing the duration of the liability with the duration of the contract. Though it can be cancelled, it is still very unusual."

A spokesman for Saint-Josse explained that this is because the municipality is only a small council that does not have a lot of money, hence it was to ensure a maximum return. The council is not being advised by anyone in this process.

Consisting of one lot, the contract is for the administration of the pension fund of statutory employees of the council administration and of the public centre of social welfare (OCMW) of Saint-Josse-ten-Noode.

The council announced that this move follows recent Belgian legislation where all boroughs are forced to appoint fund managers to manage their assets.

Hence, an increase in tenders by Belgian councils, who could previously run the assets themselves, the council's spokesperson said.

However, the council's fund is a first-pillar pension fund, which is usually a pay-as-you-go system in Belgium, explains Stroobants.

"I think they refer to the legislation for funds of the second pillar, which forbids these second-pillar pension funds to manage their own fund, though obviously the council seems to be confused here."

Despite the global pension outsourcing trend, Stroobants said, the Saint-Josse-ten-Noode move "contradicts the trend of the Belgian government at the moment, which is systematically taking over the built-up reserves that exist in the first pillar".

The borough, Belgium's smallest territory, located in the Brussels-Capital region asked to draw up their requests to participate in either French or Dutch.

The deadline for receipt of tenders or requests to participate is October 2.

Belgian pension funds managed about €13.8bn last year, insurers about €30bn in 2004.