New Belgian law 'in place' by 2003
The Belgium ministry of finance has said that the country’s new occupational pensions legislation will be passed and in place by the beginning of next year.
Finance minister Didier Reynders was speaking at a Belgium pension funds organisation seminar in Brussels last month on implementing the new occupational pensions legislation in Belgium.
Says Karel Stroobants, president of the organisation. “There was a firm commitment from the minister of finance to confirm that the law will be applicable by 1 January 2003.”
Despite the finance minister’s assurance, however, there remain a few issues that require straightening out. One of these is parity between pension funds and insurance companies.
“On the product level, the seminar confirmed that we will have a level playing field. Unfortunately there is still no level playing field on the level of the institution,” says Stroobants.
But there remains a difference in the fiscal treatment of pension funds and insurance companies. At present, pension funds are taxed 0.17% on the value of their assets, insurance companies are exempt from this. Also pension funds are, in theory, obliged to pay a 15% tax its income while insurance companies are again exempt.
In practice, pension funds can get round paying the tax on income but the flat rate is unavoidable. The insurance industry is lobbying the finance minister to maintain its exempt status.
Stroobants and the pension fund organisation have suggested that both camps face a same, lower level of tax. “It’s a question of broadening the base and lowering the tax, maybe with a level of, say five basis points. Then you have a level playing field,” says Stroobants.
As to whether the legislation will be in place by the beginning of next year, Stroobants is relatively upbeat. “We have the commitment from the minister that the law will be applicable by the 1 January. He is key to the discussions today so if he says so in public, we think that’s an agreement.”
Representatives for both pension funds and insurance companies have confirmed that the requisite royal decrees required are almost written.
Again there are two further items they need to reach a consensus on. First is the implementation, from an accounting standard, of the minimum guarantee of 3.25%.
A second problem is the issue of corporate governance, what form it should take and whether it should be compulsory.