EUROPE – UMR, a €10.2bn pension fund in France, has put plans to launch a cross-border fund in Belgium on hold after receiving a letter from the French regulator "advising" it to keep its activities within the country.
A source close to the situation told IPE that UMR had recently received a letter from the French insurance and pension funds authority – the Autorité de Contrôle des Assurances et des Mutuelles (ACAM) – "advising" the scheme to drop its plan to launch an organisation for financing pensions (OFP) fund in Belgium.
The source went on to say that the letter in itself did not constitute a formal interdiction preventing UMR from moving its activities to Belgium.
However, the source also said it would be "unwise" for UMR to ignore the letter, in light of the activities it plans to keep in France in future.
The Nantes-based pension fund originally aimed to relocate all of its second-pillar activities to Belgium last summer, but retain its third-pillar business in France.
The source said UMR's supervisory board was now in talks with French authorities to negotiate the move of its second-pillar activities to Belgium.
UMR originally planned to structure the OFP as a hybrid pension plan with an initial capital of €4.5m.
Operating as a defined contribution (DC) scheme, the OFP would have nonetheless guaranteed employees a secure payout at retirement set by the fund rather than depending on investment returns.
Charles Vaquier, chief executive at UMR, was unavailable for comment.
In a previous interview with IPE, he explained that one of the main advantages for the fund to move its second-pillar activities to Belgium was the flexibility offered by Belgian authorities in terms of funding levels.
As opposed to France, where the discount rate is fixed at 1.9%, Belgium has fixed its rate at 5%.
"Our new OFP fund will fix its discount rate at around 3% or 3.5%," he said at the time.
"As a result, when our cross-border fund's coverage ratio reaches between 100% and 110%, we will start distributing half of the gains made as profit sharing and the other half as additional provisions."
He also said that, once the coverage ratio of the OFP reached 110%, the gains would then be redistributed as profit sharing.
"The Belgian legislation will therefore enable us to distribute around 20% of additional pension provisions to retirees for the same amount of contributions compared to France," he said.
In 2003, the European Commission put in place the first Institutions for Occupational Retirement Provision (IORP) Directive, which aimed to foster the cross-border pension market in Europe.
More than 80 pension funds have registered cross-border activity under the terms of the legislation so far, but most of these are understood to cover pre-existing cross-border membership between the UK and Ireland, which have long co-operated in occupational pensions.
UMR's move last year was seen as one of the first significant EU cross-border pensions structures under the 2003 IORP Directive.
The ACAM declined to comment.