BELGIUM – The Belgian government is to set up a legal framework to make the country a domicile for pan-European pension funds, according to pension fund association BVPI/ABIP.

The move follows earlier criticism from the association that the government was not doing enough to boost Belgium’s role.

“The association also expects the government to create a legal framework in order to position Belgium within the Europe of 25 as home country for pan-European pension funds,” said incoming BVPI/ABIP chairman Philip Neyt, founder of the Belgacom pension fund.

“Belgium has to create an attractive, transparent and especially tax-wise stable vehicle that allows the pooling of European pension assets by corporations,” Neyt said.

He said if this did not occur then sooner or later it would result in a “delocalisation” of many pension funds, especially as most of the pension institutions in Belgium are linked to subsidiaries of multinational corporations.

He said in his maiden speech: “In an era of globalisation and cost optimisation, it is a no-brainer for multinational corporations to entrust the management of their pension funds to one single European competence centre.

The dream of a single European pension plan wouldn’t happen overnight “as the harmonisation and coordination of the social and labour laws are not foreseeable in the immediate future”.

The domestic Belgian pension fund sector is coming under fire. Last month a consultant at Hewitt Associates said the increasing regulatory requirements could destroy the smaller Belgian pension fund industry.

And the International Monetary Fund has identified what it termed “major weaknesses” in the supervision of pension funds in Belgium.

Neyt was elected chairman of BVPI/ABIP at the association’s general assembly on March 29. He takes over from Bernard Cardon de Lichtbuer.

Eddy Wymeersch, chairman of the CBFA regulator told the meeting that the CBFA would shortly apply a new risk model to screen the financial health of the pension institutions.

Neyt said there was no reason to apply “shock therapy” to the sector which “has proved to be very stable over the years, which cannot be said of quite a few Anglo-Saxon pension funds”.

Last month Mercer Human Resource Consulting said Belgian pension funds delivered median returns of 16.8% in 2005 - almost double 2004's 8.6%.