Pensioners at a recent ‘symposium’ on pensions leave sated but not much wiser on certain crucial aspects of the pensions world, reports Jeremy Woolfe.
Brussels may be the EU’s centre for financial legislation, including for pensions. But an event in the city also illustrates that the world of pensions can be divided into sectors so different it is hard to imagine.
There is the sector of pension fund management itself, and, way beyond that, in Brussels, the matter of legislating the rulebooks-in-the-making. Finally, and apparently quite disconnected, is the section taking in individual pensioners themselves.
Take a quiet summer’s evening, and a location just off a fine Brussels street. Its residences feature elegant terraces of serpentine facades. Nearby was a conference: ‘Making the most of your pension in Belgium’.
The audience comprised around 50 present or future pensioners. They were mostly members of the city’s large expatriate community. Typical were former employees of corporate headquarters for Europe and beyond. American citizens, Brits, Germans and so on, were guests for the “symposium”, held at the premises of ING.
The bank is part of the international group, of Dutch origin. It does offer pension packages. As hosts for the evening in question, it also offered sparkling white wine to wash down “nibbles”. On its website, it claims that its strategy includes applying “initiatives focused on customer centricity”.
The evening exercise went remarkably low-key on promotion of the bank’s pension products. However, one of its slides did include bank contact details, such as phone numbers, to supply the invitees with “expertise and tools for your financial planning”.
Formal presentations covered rules for achieving retirement age and formulae for accruement of pension rights under Belgian norms. There were warnings against what can be confiscatory inheritances rules. Guests were cautioned: “Don’t die in Belgium!”
Invitees included a lady with a brown jacket who had worked in six different countries. How, she asked, can I get the diverse national payments cleanly coordinated? Unfortunately, you can’t, answered the sympathetic lady from the Belgian Ministry of Pensions.
Then there was the English retiree, in a green corduroy jacket, who was thinking of moving his residence to Belgium, to be near his daughter. My UK pensions give me quite a good income, he said. How could he avoid suffering under Belgium’s penal code for income tax, he asked? Theoretically, you can’t, answered the ministry official, with sympathy.
Fine, but as the formal presentations were concerned, critical issues, such as the rate of return on pension fund investments, were apparently deemed to be of no relevance. The same applied to sales inducements and declarations of management fees. As for potential EU legislation on rules such as the KID pre-sales information documents, at least on third-pillar pensions, it might just as well have not existed.
Also, for any EU-sponsored moves to encourage long-termism for investment funds, it seems that pensioners would have had no interest.
Later, over the fizzy wine and nibbles, the individual presenter for the bank, who deals with expatriate matters, was asked for his opinion of the 2012 report from the Paris-based OECD economics organisation on pensions.
Ah, that looks interesting, was his reaction, glancing at it, evidently for the first time. If Belgium comes without credit, his reaction, clearly in all innocence, was that that was regrettable.
We were then shown a study, by EuroFinUse ‘Private Pensions: The Real Return’. Its 100 pages illustrate that real returns can leave the pensions saver with a diminishing pot of assets for his old age. The paper puts blame only partly on inflation, but heavily on administrative and sales inducement costs, as well as taxation.
What was also clear was that, as the symposium guests walked away into the evening sunlight, they would have been as unaware of certain crucial financial factors as, most likely, they were when they had arrived.