efrp meeting - 20011 belgian association of pension funds country report belgium

EFRP MEETING - 2001 1

BELGIAN ASSOCIATION OF PENSION FUNDS

COUNTRY REPORTCOUNTRY REPORT

BELGIUMBELGIUM


A / Structure of Belgian Retirement Provisions

11stst pillar: PAYG legal pensions pillar: PAYG legal pensions

22ndnd pillar: supplementary, collective pillar: supplementary, collectivegroup insurance + pension fundsgroup insurance + pension funds

3th pillar: long term savings, individual3th pillar: long term savings, individual


A/ Structure of Belgian retirement provisions

1st pillarPAYG

socia l security

2nd pillarsupp lem entary, co llective

group insurancepension funds

3d pillarlong te rm ind iv idua l savingfinancia l instrum ents (IC B)

3 p illar system


B/ Developments (1)

Political contextPolitical context: growing awareness of : growing awareness of impact on social security of demographic impact on social security of demographic evolution and the need for actionevolution and the need for action ““zilverfonds”zilverfonds” reform of 2nd pillar reform of 2nd pillar


B/ Developments (2)

““zilverfonds”zilverfonds”

rescue of 1st pillar pensions?rescue of 1st pillar pensions? gradually funded up to 120 bn EUR gradually funded up to 120 bn EUR

by 2030 by 2030 non-fiscal financingnon-fiscal financing also considerations of debt also considerations of debt

managementmanagement


B/ Developments (3)

reform of 2nd pillarreform of 2nd pillar

facilitating access to facilitating access to complementary pensions for larger complementary pensions for larger part of population part of population

complementary pension = complementary pension = complementary social protectioncomplementary social protection


B/ Developments (4)

reform of 2nd pillarreform of 2nd pillar

““sectorschemes” in key rolesectorschemes” in key roleorganise “solidarity” organise “solidarity” set up by CBA set up by CBA

minimum return for DC-plansminimum return for DC-plans


B/ Developments (5)

Legal frameworkLegal framework

Royal Decree 7 may 2000: Control legislation Royal Decree 7 may 2000: Control legislation finalised finalised

Multi campany PF: final RD still pending, will Multi campany PF: final RD still pending, will allow for smaller companies (not belonging to allow for smaller companies (not belonging to sector) to jointly set up PFsector) to jointly set up PF

Law proposal “reform 2Law proposal “reform 2ndnd pillar” shortly before pillar” shortly before parlementparlement


C/ Statistics (1) 1998ContributionsContributions (bill.euro) (bill.euro)

Pillar 1 = payments in PAYG Pillar 1 = payments in PAYG systemsystem 62% private sector62% private sector 29% public sector29% public sector 9% self employed9% self employed

Pillar 2 Pillar 2 79% group insurance79% group insurance 21% pension funds21% pension funds

Pillar 3Pillar 3 92% life insurance92% life insurance 8% pension savings8% pension savings

02468

101214161820

contribution'98

1 pillar2 pillar3 pillar


C/ Statistics (2) 1998

ReservesReserves (bill.euro) (bill.euro)

Pillar 1 est.Pillar 1 est. Pillar 2 Pillar 2

68% group insurance68% group insurance 32% pension funds32% pension funds

Pillar 3Pillar 3 74% life insurance74% life insurance 26% pension savings26% pension savings

0

5

10

15

20

25

30

35

reserves '98

1 pillar2 pillar3 pillar


C/ Statistics (3) 1999

Asset mixAsset mix

Bonds: declineBonds: decline Stock: Stock:

strong increasestrong increase in ‘99 for the first in ‘99 for the first

time > 50% of time > 50% of assetsassets

Real estate: +/- 5%Real estate: +/- 5%

20%

25%

30%

35%

40%

45%

50%

55%

bonds stock

909599


C/ Statistics (4) 1999: Average annual return over period of x years

16,7%15,1%

10,3% 10,2%

15,0%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%


D/ Concerns of BAPF (1)

Need for distinct regulatory framework, no Need for distinct regulatory framework, no longer “appendix” of insurance companieslonger “appendix” of insurance companies

True “level playing field”True “level playing field” Multi company PF legislation Multi company PF legislation fiscal reformfiscal reform Law proposal “reform 2Law proposal “reform 2ndnd pillar” shortly pillar” shortly

before parlement. before parlement.



Law proposal “reform 2Law proposal “reform 2ndnd pillar” shortly pillar” shortly before parlement. Many concepts still have before parlement. Many concepts still have to be specified: to be specified: ““guaranteed return”in DC-plansguaranteed return”in DC-plans

what will be the actuarial impact?what will be the actuarial impact? content of guarantee?content of guarantee?



Law proposal “reform 2Law proposal “reform 2ndnd pillar” shortly before pillar” shortly before parlement. Many concepts still have to be specified: parlement. Many concepts still have to be specified: Concept of “solidarity”Concept of “solidarity”

what does it mean?what does it mean? Interest versus capitalInterest versus capital

Interest payment is always an option.Interest payment is always an option. minimum level for conversion?minimum level for conversion?

Concept of “transparancy” => mandatory Concept of “transparancy” => mandatory information => “red tape” ??information => “red tape” ??

efrp meeting - 20011 belgian association of pension funds country report belgium

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