Frequently Asked Questions

No, the capital/funds of the pension schemes is/are administered separately. This is called ‘ring-fencing’. A shortfall in one pension scheme can therefore not be made up by another pension scheme. The funds of your employer's pension scheme will therefore be administered separately. This is not the case with a sector-wide pension fund.

Setting up a European pension fund is a costly business. These IORPs are only set up by very large businesses that want to combine their pension schemes in several countries into a single pension fund. For smaller businesses, the costs of setting up their own fund are too high in relation to the benefits.

UnitedPensions is an existing pension fund, in which several companies can take part. Your employer therefore does not have to set up anything; it can simply make use of an existing structure. Because the costs are borne by several companies, they are lower than those of a company pension fund. Moreover, the participating companies do not have their own boards of governors for the scheme. There is a single professional board of governors for all companies participating in UnitedPensions. This board may not make any decisions on your company's pension scheme or funding; these agreements are laid down in advance in legal documents.

The basic premise of an IORP is that there should always be sufficient funds to cover the pensions. The aim is to protect the participants and pensioners. According to European regulations, the supervising authority in the country where an IORP is established must ensure that the pension scheme complies with the applicable regulations. However, they do not set out how this should be done; it is down to the scheme to ensure that local regulations are complied with.

The Pension Funds Directive, Directive 2003/41/EC, came into effect in 2006. According to this directive, pension schemes from one or several other EU Member States may be administered from a single EU Member State. UnitedPensions is therefore a cross-border pension fund. Such a pension fund is also referred to as an ‘IORP’, which stands for International Organisation for Retirement Provisions.

While De Nederlandsche Bank (DNB, the Dutch Central Bank) supervises pension funds in the Netherlands, the IORPs are supervised by the authorities in the countries in which they have been established. This supervision mainly relates to the requirements regarding buffers and funding, but also covers governance. The tax, social and labour laws of the employer’s country continue to apply to the pension agreement.

In Belgium, the law on the supervision of institutions for occupational retirement provision (Wet betreffende het toezicht op instellingen voor bedrijfspensioenvoorziening, Wet IBP) must be complied with. This law does not contain any specific, quantitative regulations with regard to actuarial interest rate, buffer requirements, recovery plans and self-funding premiums.

This is therefore different from the situation in the Netherlands, where the DNB sets out everything in great detail. This is also referred to as ‘rule-based’ supervision.

Supervision by the Belgian supervising authority, FSMA, is ‘principle-based’. An employer can decide on the criteria for premium setting, buffers, and so on, but has to convince the FSMA that the agreements with the employees can be met by doing so. An extensive case file has to be submitted for this, including detailed calculations. The FSMA takes the company's circumstances into consideration here: how solvent and creditworthy is the company?

In all cases, the pensions must always be fully covered. If this is not the case at any point, the employer has to make up the difference within a year.

Supervision in Belgium is not less strict than in the Netherlands, but Belgian pension funds are not structured in the same way as Dutch pension funds. The main difference lies in the fact that Belgian pension funds (and therefore in the future the IORPs) have an obligation of means (ie, they must do their utmost to obtain certain results). The eventual result obligation (ie, ensuring that employees receive their pension benefits) lies with the employers (the contributing companies).

This explains why, under Belgian law, pension rights cannot be cut as long as there is an employer, since the employer will always, in whatever circumstances, have to contribute to guarantee previously-acquired pension rights. This legal background plays a role in the way commitments are valued (including the parameters for the valuation) and the funding ratio is determined.

Like the DNB, the Belgian supervising authority (the Financial Services and Markets Authority, or FSMA) puts the interests of the participants first; the supervision is geared to this. The supervision in both countries must comply with European legislation. It is also important to know that all matters related to Dutch social and labour law will continue to apply in full in the new situation, and the pension scheme will continue to fall under the supervision of the Dutch supervising authority. In short, not less supervision, but a different nature of supervision.

Other calculation rules may be used, provided that the supervising authority agrees to this. This means that the contribution for the pension accrual is more stable, that it no longer depends on the actuarial interest rate, which continually fluctuates. The buffers are also lower than those in the Netherlands since your employer guarantees to make up any shortfalls. Because Belgian regulations are not cast in stone, tailor-made solutions can be provided, and scheme funding can be structured in accordance with a company's stability.