Pieter Omtzigt said: "The proposed directive is counter productive. It will not encourage countries to introduce capital-funded pension systems, but will in particular lead to supervisory arbitrage and the possibly of tax arbitrage." If nine countries issue a yellow card, the European Commission must reconsider its proposal. Three weeks ago, Omtzigt launched a similar proposal against the suggested IORP review in parliament but received support only from the Freedom Party (PVV), the elderly party (50PLUS) and the Socialist Party (SP).
The so-called "Belgium route" for pension funds has generated much debate, following confirmation that the pension fund of Aon Netherlands is thinking to relocate its pension plan there. "We need to ask ourselves whether we must allow pension funds to move from A to B in Europe", said Omtzigt, who did not see any benefits from a European framework to prevent supervisory arbitrage. "The pensions system is a national issue, and it should stay like that", he said. "The exceptions should be border labourers and people who work in more than one country. However, the Directive does very little for them."
According to Eric Bergamin, a pensions lawyer, the Netherlands has made poor decisions in its lobbying against the IORP. "It has continuously stated that we don’t want stricter solvency requirements in European legislation, but we have insufficiently advocated a proper European harmonisation of rules for capital-funded pensions", he said. "As we do allow mobility, companies can now move to Belgium, using supervisory arbitrage." For example, the Belgian supervisory regime does allow higher discount rates but demands a financial guarantee from the employer. In Bergamin’s opinion, harmonisation should have provided for European definitions of a fully funded scheme, investing under the 'prudent person', as well as a standard for a discount rate and recovery periods. Bergamin said: "The market value of certain safety nets, such an obligation to plug funding gaps in Belgium, and national safety nets in the UK and Germany, could have been taken into account in schemes’ holistic balance sheets. However, we don’t have all these elements now."
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