IPE Awards: Professionalisation of pensions 'damaged' Dutch economy
EUROPE – The over-professionalisation of Dutch pension funds and their resulting shift away from domestic investments has stunted the country's GDP growth by as much as 2%, former prime minister Ruud Lubbers said at the IPE Awards Seminar in Copenhagen.
Giving the keynote speech, Lubbers noted that the previously commonplace practice of pension funds offering mortgages had ceased – and critics were reluctant to see the practice resume, pointing to the impact of the sub-prime mortgage market in the US.
However, Lubbers, the Netherlands' longest-serving prime minister, noted that the problems with US sub-prime stemmed from the amounts leant to individuals simply being too large, and expressed hope that ongoing discussions could soon lead to a change of policy.
Dutch pension funds have recently come under pressure to help the country's banks de-leverage their balance sheets and take on some of the institutions' mortgage books.
At first reluctant, APG CIO Angelien Kemna last month said securitised mortgages would be considered, in the right circumstances.
However, she qualified her support by saying: "There must be a proper risk/return ratio to make such investments attractive to pension funds."
Lubbers, who since leaving office was chairman of the Energy Research Centre of the Netherlands (ECN), told delegates he had supported the idea of a political union within Europe since chairing the Maastricht Treaty conference that laid the groundwork for the single currency.
"When I was chairing Maastricht, just before that, I came to the conclusion that we have to go for the political union as well – we have to make the next step," he said.
"I left office in 1994, after 12 years of being prime minister, and I really thought those in charge in those days would finalise the concept [of the single currency] by adding to the Maastricht treaty a system of good governance."
He said such treaty amendments should have included the establishment of a system akin to the US Federal Reserve model, with a European Union finance minister overseeing the euro-zone.
Lubbers added that his contemporaries instead focused on allowing further member states to join the commission, a "fundamental mistake" but in his opinion an understandable one in the wake of the Cold War.
The former UN High Commissioner for Refugees also said that a lack of good governance within the euro-zone had only been one of the reasons for the recent economic troubles.
"To give you a second example of the reason we have this economic crisis, it is a crisis of fear," he said.
He said this crisis of fear could be found in the current situation surrounding green investment and the resistance from certain lobby groups that had a vested interest in the status quo remaining – despite reports from organisations such as the OECD highlighting the benefits to employment and growth that such green industries could bring an economy.
Fellow keynote speaker Connie Hedegaard, EU Commissioner for climate action, later on Thursday made a similarly impassioned plea for investors to recognise the importance of green economic growth, saying that a continuation of business as usual was unsustainable, as climate change acted as a "threat multiplier" by increasing a number of other risks investors were left to tackle.