Henk becquaert case study - cross border pension funds time to jump

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Henk becquaert case study - cross border pension funds time to jump

  1. 1. 1<br />Case Study: Cross Border Pension Funds, Time to Jump<br />HenkBecquaert, Member of the Board of Directors FSMA<br />Financial Services and Markets Authority (FSMA) - T : +32 2 220 52 11 - E : pensions@fsma.be - www.fsma.be<br />
  2. 2. Occupational Pensions<br />Long live diversity! <br />DC, Cash Balance, DB, lump sum, annuities,...<br />Large to very small pension institutions<br />Social and labor laws vary greatly<br /> Appropriate supervision is essential<br />2<br />
  3. 3. Cross-Border Activities<br />Special legal vehicle (OFP)<br />Articles of association and other documents: flexibility<br />Flexible organization<br />general assembly<br />board of directors<br />other ...<br />Ring-fencing is possible<br />level of 'solidarity' is to be determined: from no solidarity to total solidarity<br />via a separate fund (total ring-fencing)<br />via a buffer fund<br />via ...<br />to be set down in governing documents (ring-fencing as long as no bankruptcy)<br />3<br />
  4. 4. Financial Aspects<br />The financing plan<br />Technical provisions: no percentages, no quantitative restrictions, proportionality<br />Regular financing by the contributing enterprise<br />No changes year on year, unless justified<br />Statement of investment policy principles<br /> Needs to be prudent, coherent and justified<br />Restoration plan or recovery plan<br />4<br />
  5. 5. Supervision of the “Prudent Person” Principle<br />Openness<br />Responsibility and accountability<br />Fit and Proper<br />Good governance<br />Internal supervision (internal control, internal audit, compliance officer and an actuary), the external auditor and ultimately the FSMA<br />Knowing one's own risks<br />5<br />
  6. 6. Very Limited Cross-Border Activity<br />Fiscal disharmony<br />Hidden protection mechanisms<br />The financial crisis<br />Lack of experience ==> first movers<br />S & L law vs. prudential law<br />Cultural difference<br />Employees/retirees' councils to be convinced<br />6<br />
  7. 7. Convincing Employees/Retirees Councils<br />Pension councils in host country are possible<br /><ul><li>For employee representation if needed
  8. 8. For binding or non-binding opinions if needed
  9. 9. By pension plan, country or group
  10. 10. S&L law (information, participation, ...)</li></ul>7<br />7<br />
  11. 11. Cross-Border Activities in Belgium<br />9* Belgian IORPs operating cross-border<br />BE, LU, NL, IE, IT, MA, LI, CY, LT<br />Several in the pipeline<br />Major multinationals<br />Multi-employer<br />New markets, mobile workers, small pension funds, etc.<br />*as at 15 June 2011 <br />8<br />
  12. 12. How Does the FSMA Operate ?<br />25 years of pension fund experience<br />Circular letters, announcements, memoranda <br />Individual replies by email, letter, etc.<br />WWW.FSMA.BE<br />pension@fsma.be<br /> (in English, German, French and Dutch)<br />9<br />

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