Belgium set to tighten pension regulations
BELGIUM - The Belgian financial regulator says forthcoming regulations will provide tighter controls over pension funds.
"The new law is stronger, safer and gives us more power to control also the corporate side and the governance side from pension funds," said Henk Becquaert, who works in the Supervision of Supplementary Pensions department of the commission for banking, finance and insurance (CBFA).
He told IPE in an interview: "Under the old law we regulated which kinds of assets a pension fund could invest in. Now we are looking much more into whether the assets are matching the liabilities, for example."
There will also be more emphasis on how liabilities are calculated. And this is the point where critics see a problem. For smaller pension funds it might be difficult to comply with regulations of appointing an internal auditor and an internal compliance officer. The new law most likely to be published in November.
Becquaert told IPE last year that there were potential problems under the old system. He said: "On certain issues we are a paradise which can give rise to problems such as fraud."
The new regulations not only provide tighter control over pension funds, they are also creating the framework for pan-European pension funds. From January a purpose-built vehicle for occupational pension provision, the OFP will be set up and at the same time tax incentives for foreign pension funds will be put in place.
In March 2006, the International Monetary Fund identified "major weaknesses in the insurance and pension fund areas" of the supervisor CBFA. It added, however, that they are being addressed.
Asked whether Belgium's reputation as paradise for all kinds of financial dealings will be a problem, the official concedes that the new system will have to prove itself.
To ensure the enforcement of the law, the department saw an increase of staff by four people from 18 at year-end 2005.