October will also see the government addressing question marks over the introduction of industry-wide pension funds.
While earners in Belgian corporates have enjoyed second pillar schemes for some time as a protection against income drop upon retirement – due to the career averaged first pillar, only one in three employees is currently in an occupational scheme.
Fabrimetal, the recently formed pension fund for metal workers heralded a sea change in Belgium – a DC pension fund with guarantees – for all employees in an industry sector.
Sectors that don’t have such schemes now want them, according to Henk Becquaert, at the social affairs ministry. “The demand is not entirely from employers, but it is cheaper tax wise to give a wage rise as pension rather than wages.”
The problem arises over the issue of level playing fields between providers seeking to capitalise on the advent of such potentially enormous schemes.
“The insurance companies say that the sector pension funds have tax advantages. They pay less tax because these funds are regarded as a social contribution,” says Becquaert.
Becquaert highlights another issue: “Also, some existing sector funds are working in a system of pay-as-you-go (PAYG), which is dangerous, because sectors can grow, but not always.
“Furthermore, there are financing question marks over sector funds, because sometimes, when you leave a sector that you have been working in for ten years, you lose everything.
“This is in contravention of the existing Loi Colla on pensions. Only now are the old sector funds starting to make the real calculations they should have done before and changing to a capitalisation system.”
Criticism has also been levelled at sector funds which keep ‘pension’ assets within the same structure as other social benefits, with questions asked about the safety and independence of this money as a ‘retirement’ benefit.
Becquaert says the government is aiming for a broad solution.
The likely outcome, he says, is that sector funds will come under the remit of the country’s assurance chamber – meaning they will have to change to capitalised pension schemes with a transition period invoked for abandoning their PAYG status.
“We need this because discussions between social partners on the next two years’ social agreements begin then at a national level and we have to know where we are going for the sectoral schemes.” However, he injects a note of reality into autumn’s multiple pensions agenda. “Expectations are very high, but when the consensus and conclusion arrives it may be less important than what was expected.
“There will be some nuances because there are strong differences of opinion. When the left and right is in the same government but the centre party isn’t, things like this can happen.”
A royal decree is also still awaited for 1998 legislation on multi-employer funds, which may come under the same status as sector funds.
And Becquaert says the government is also examining taxation issues for third pillar provision: “We have tax relief at the moment but there is a limited amount you can put into these accounts and in reality there are strict rules which are not flexible. “You can invest your money with a bank or an assurer but you can’t take it out or put it elsewhere once it is committed.
“I think the government may be looking at a more flexible arrangement, something like a 401k plan but on an individual level.”
They say everything comes in the fall. For the Belgian pensions scene this autumn, the cliché could not be truer.