The IORP directive, while calling for more transparency in pension matters, could hardly be regarded as an example of transparency itself. Clarity and transparency are indeed probably the most missed items in the directive. Therefore, the correct transposition into national laws is not always a foregone conclusions.
The directive should have been transposed in the national legislation of all member states by September 2005. As far as we are aware, many member states have failed to meet this deadline, dividing Europe into ‘good’ and ‘bad’ worshippers of the pan-European pensions idea.
The Belgium governing bodies have not met the deadline set for the transposition of the directive. Last summer, the representative bodies of the pension sector received from the Belgian control authorities (CBFA), a draft of a new law, aimed at transposing the directive as well as rewriting the existing control laws on pension funds.
This draft was commented and discussed, resulting in a new draft, which is supposedly ready to be taken up to the government level for ultimate voting in parliament. This voting may take place in the coming months.
The new draft law counts over 180 articles, and is therefore not easy to summarise. Nevertheless, let us try to point out a few particular items which are new as compared to the existing situation:
q All types of pension funds are brought under the same prudential regulations. Formerly, some differences in prudential rules existed between employer sponsored pension funds and pension funds set up for certain professions (medical doctors, for example), also called ‘caisses de pension’ as opposed to ‘fonds de pension’. These differences are by and large wiped out and all pension funds are now called ‘institution de retraite professionnelle’ (institution for occupational pension) or IRP’s (IBP’s in Dutch). There remain some differences, however, between the former fonds de pension and the caisses de pension, which are related with the specific legislation on products and services offered (the so-called LPC and LPCI laws) and with solvency rules. The latter is to be expected as employer-sponsored pension funds are operating in terms of solvency under different conditions to pension funds for self-employed workers.
This unification of legislation for fonds de pension and caisses de pension is in line with the directive, which applies to employer sponsored pension funds as well as to pension funds for self-employed workers.
That draft law also clarifies the situation applicable to pension funds belonging to state owned or public enterprises, by deciding which funds do and do not fall under the new prudential control rules.
q As might well be expected, the new law also transposes the EU directive into the Belgian regulatory framework.
In fact, and apart from the typical ‘cross-border activities’ rules, most of the existing Belgian pension control regulations are already very much in line with the directive’s rules. Nevertheless, some modifications and additions are necessary, for example, with regard to information to be provided to pension plan participants.
As far as the aspect of cross-border activities is concerned, the directive’s rules are transposed in a fairly straightforward manner into future Belgian law.
However, there remains the question of “the requirements of social and labour law relevant to the field of occupational pensions under which the pension scheme sponsored by an undertaking in the host member state must be operated”. The Belgian draft law indicates that the provisions of the law on complementary pension (LPC) as well as some rules on information to the participants and some investment rules are part of these requirements.
Such definition is still a matter of controversy among legal experts, who challenge the position taken in the draft law as too difficult to apply in a practical situation of a pan-European pension fund comprising a Belgian plan. Belgium is certainly not the only country where the concrete application of this article is creating some discussion among experts. The social and labour law relevant to the field of occupational pensions is not a clear-cut concept, and there is room for minimalist as well as maximalist interpretations. Minimalist interpretations may give cause to cutting the margins in the rights of participants of pan-European pension funds, but a maximalist interpretation is simply going to choke any attempt to set up a pan-European pension fund on the first place. Some commonsense may be required here.
q Adopting the new European investment rules should not constitute a major difficulty for the Belgian lawmakers. Since the early 1990s investment rules have been fairly flexible for Belgian pension funds, only with a few strings and/or limitations for some (rather exotic) types of investment, which up to now are not really hindering Belgian pension funds. Although the details of the future investments rules are to be described in further Royal Decrees, the present wording in the draft law indicates that Belgian investment rules will be very close indeed to the directive’s spirit of putting the ‘prudent man’ approach over the quantitative approach to investment rules.
It is also worth taking a look at what the draft law is not doing.
The first important subject is the tax situation. Pan-European pension funds are still greatly hindered by existing tax obstructions with regard to contributions received from plan sponsors and benefits paid to beneficiaries. As long as pension contributions paid across borders are not treated the same way as contributions paid within borders, there will be little room for pan-European pension funds to grow. The same applies to benefits paid. We are aware that the commission is working very hard to create a tax neutral situation in Europe with regard to taxation of cross-border pension contributions as well as benefits, but we are also aware that some countries will defend their existing anti-cross-border tax rules down to the last man. Belgium seems to be one of those.
Hugo Clemuer is secretary general of the Belgian Association of Pension Funds


In the shadow of the new draft law lurks the question of what Belgium is doing to position itself as home-country for pan-European pension funds. In March 2004, the Belgian government issued a declaration stating that it considered the transposition of the directive an unique opportunity to attract pan-European pension funds on its soil, declaring the benefits of such a move.
Almost two years later, the government is still hesitating to take concrete measures to attract the attention of the international community in this field, such as the creation of a specific legal entity for pan-European pension funds, or the amendment of existing tax rules in order to align those with the European EET norms.
Nevertheless, Belgium does possess quite a number of essential trump cards to attract new pension funds, such as political stability, financial and actuarial expertise, a transparent pension fund control law, multilingual staff, and easy connections with the rest of Europe. After all, it not Brussels the capital of Europe?
After all, is Brussels not the capital city of Europe?

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