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Finding a home for your pension plan in Flanders

A growing number of multinationals are transferring their pension funds to Belgium, and Flanders as a region. In doing so, they follow in the footsteps of American pharmaceutical giant Johnson & Johnson and international financial services provider Euroclear, to give just two examples.

This should come as no surprise. After all, Flanders has spared no effort in establishing itself as a prime location for new pan-European pension plans looking for a home. A transparent legal framework for pan-European funds, a flexible governance model and an advantageous tax system for pension funds are just three benefits of Flanders’ competitive environment.

Flanders’ main assets for your pension fund

One of Europe’s biggest pension fund players

Belgium offers access to 20 pan-European pension funds for multinationals managing the pension reserves for employees from various countries (figure for 2017). In this way, the country secures a comfortable spot among the top 3 of Europe’s biggest pan-European pension fund players.

Top 5 achiever in European stress tests

What’s more, Belgium is one of only 5 countries that was successful in every scenario explored by the EU-wide pension fund stress tests carried out by the European Insurance and Occupational Pensions Authority (EIOPA) in 2015.

This means that the Belgian pension funds industry can withstand even the tensest economic conditions.

Pragmatic, flexible approach

Though by no means less stringent or carefully developed, the Belgian governance model for pan-European pension funds does allow for a higher degree of flexibility than those of neighboring countries. Rather than focusing on to-the-letter compliance with regulations, the Belgian regulator adopts a more pragmatic approach that concentrates on outcomes: if the way in which you put the regulations into practice is coherent and prudent, you’re good to go.

Here’s a practical example of this pragmatic approach in action. If a company sets up a retirement plan for its employees and – as a plan sponsor – has the financial means to give a clear guarantee of funding, then this should be considered a plus by regulators, right? Unfortunately, this is not the case in every country. In Belgium, however, financially strong companies receive more regulatory flexibility than businesses that are not well-funded.

No withholding tax

Companies with pan-European pension funds in Belgium are exempt from paying withholding tax on pension contributions to foreign employees. This completely rules out double pension taxation for companies with multinational workforces – without any additional paperwork!