News / Do funded systems based on capitalization still have a future in the current environment? – Pensioplus

Do funded systems based on capitalization still have a future in the current environment? – Pensioplus

30/09/2020: 14.30 – 15.00

How can pension funds contribute to a universal coverage of the 2nd pillar in Belgium, thus ensuring an adequate income after retirement?

Given the current circumstances of persisting low interest rates, the discussion between funded or unfunded schemes re-emerges. Both funded and unfunded regimes each have their own merits and risks.

This discussion was theoretically underpinned more than 50 years ago by Henri Aaron. This theory – subsequently known as “the Aaron condition” – states that funded systems are more efficient than Pay-as-you-go systems if the real net return on investment is higher than the sum of the average wage increases and the average active population growth over a given period of time (namely 30–40 years).

This discussion has to be placed in a far broader context taken into account various factors such as the historical context of the pension system (as a whole) and the national “pension culture”, knowing that the real debate concerns the optimal spreading of risks and responsibilities.

How can we bring about an unfunded universal statutory basic pension for everyone, at a fairly high level, which is supplemented by a generalized 2nd pillar where social partners can take up their respective responsibilities? And what role can pension funds play in achieving this goal?

About the speakers

Jan De Smet

Jan De Smet (55) started his career at what was then Bank Brussel Lambert after studying economics and taxation at Ghent University. He subsequently joined Agfa-Gevaert Group. There, he held various senior finance positions, including six years  abroad (Poland and the Netherlands), rising to the position of head of accounting. Since 2007, he had also taken up various finance roles in the group’s Belgian and UK pension funds. In 2019, he made the switch to Pensioenfonds Metaal/Fonds de Pension Métal, of which he serves as CEO. Pensioenfonds Metaal is one of the largest sectoral funds in the country. It provides a supplementary pension for workers in the metal industry in Belgium. The fund has approximately 266,000 members and manages assets of approximately €1.5 billion.

Marc Van den Bosch
Marc Van den Bosch holds a Master in Law at the University of Ghent (1998) and complements his education by obtaining a Master in Fiscal Sciences at the Fiscale Hogeschool of Brussels (2001) and a Diploma Investment Advisor at Ehsal-EMS (2013). After numerous years as Legal Counsellor for Dexia Insurance followed by his function as Group Insurance Manager, Marc takes the responsibility of Pension Fund Manager for Dexia Life & Pensions in Luxembourg, before joining Sepia where he serves as President of the Executive Committee from 2009 onwards.

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