BRUSSELS - The Belgian government is having second thoughts about its recent proposal to force the $17 billion Belgian pension industry to invest about 20% of total assets in private equity and new shares of existing Belgian companies.
The proposal would bolster the sagging Brussels Bourse, while protecting Belgian banks and companies from foreign influence.
The Belgian pension industry, and even the industry regulator, have voiced strong opposition to the proposal, which was aired in late January.
The proposal was presented by the Council of Ministers, the executive body of the ruling Christian Democrat-Socialist coalition, as part of a package of measures to increase the flow of risk capital from traditionally conservative Belgian savers to investment-hungry Belgian enterprises.
Other proposed measures include establishing an over-the-counter stock market, permitting creation of quoted venture-capital funds, allowing banks to increase their stock investments, and allowing issuance of non-voting shares.
The minimum percentage of pension assets to be placed into new Belgian shares - initial public offerings, unlisted companies, or, say, dual-class capitalizations of existing public companies - was not specified in the preliminary proposal, but both industry and government sources agree 20% is a likely target.
The Belgian pension industry attacked the proposal, which still requires further study by government groups before being proposed as legislation.
At a Feb. 7 meeting, Jean Jacobs, the chairman of the Belgian Association of Pension Funds, told members the proposal was both unnecessary and dangerous.
Mr. Jacobs, who is managing director at the Unilever Pensioenfonds "Union" VZW, Brussels, said 17% of Belgian pension assets were invested in Belgian stocks as of year-end 1994, the latest data available. (Belgian stocks' strong performance last year likely has boosted the figure to 18%.)
Mr. Jacobs said a new regulation imposing a 20% minimum would not make much of a difference.
However, he added, it was dangerous to require pension assets to be invested in a narrow sector of the Belgian economy, particularly because both European Union law and Belgian government practice had been moving in the direction of greater freedom of choice for money managers.
A.M. Lenaerts, recently appointed head the government's Office of Pension and Insurance Control, also objected to the proposal.
He cited recent government efforts to eliminate a 15% minimum investment requirement in state bonds. He also pointed to the legal responsibility of money managers to invest prudently.
Koen de Ryck, managing director of Pragma Consulting NV in Brussels, said the industry is generally opposed to the government proposal. "We are in favor of more investments in equities, but we are against the reintroduction of minimum requirements," he said.
Mr. de Ryck also said the Belgian proposal would violate the European Union's Third Directive on Life Insurance, because the proposal would affect not only pension funds but also insurance assets.
"In my view, the European Commission would attack the government of Belgium over such a proposal," said Mr. de Ryck, who also serves as the permanent representative of the European Federation for Retirement Provision.
The proposal has its roots in the ongoing effort by Finance Minister Philippe Maystadt to invigorate the Belgian stock market by reducing regulation and increasing competition.
But, at the same time, his ministry has made efforts to protect local brokers from foreign competition and has criticized foreign investors making short-term bets while not investing in Belgian bonds.
The Belgian stock exchange, which as recently as eight years ago still had prices chalked up on blackboards by clerks on catwalks above the exchange floor, has been struggling to modernize. Initiatives to reduce commissions by broadening competition and efforts to improve liquidity and heighten transparency have been introduced.
The latest pension investment proposal was instigated by both Mr. Maystadt's office and the major Belgian banks, which have major holdings in Belgian industry. It is clear there still is considerable political weight behind the minimum-investment proposal, despite pension industry opposition.
Olivier Lefebvre, the 38-year-old former chief assistant to Mr. Maystadt, who was involved in developing the proposals, took over Feb. 1 as the new head of the Bourse's management committee. A political appointee, he remains a force in Belgian politics.
