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Ambachtsheer slams pension fund governance

NETHERLANDS – A leading pension fund analyst, Keith Ambachtsheer, has slammed pension fund governance as “poor”.

Ambachtsheer, president of Canada-based KPA Advisory Services, told a conference that pension fund governance on a global scale is “poor” with, the UK being low in the list with the Netherlands doing relatively well.

He made the remarks as the chair of a roundtable discussion. “On a scale from one to 10 the average pension fund is five or less,” he told IPE after the debate.

“On a countrywide basis Australia and the Netherlands do relatively the best and the UK is down there with the North Americans,” Ambachtsheer said. Italy, Germany and France were “not even on the map”.

“What gets measured, gets managed,” he said, explaining that pension funds which want to achieve better management, have to start measuring “the right things”.

But he said he was optimistic as issues such as pension governance and financing are now at “senior management and boardroom level, finally”.

“The big questions about how do we do this better than in the past are being now asked,” he said. “The next question, of course, is how they will answer.”

“It is one of those things where it is only adversity that creates better outcomes because it forces people to sit back and think ‘we have not done lot in the last three years our balance sheet does not look as good as three years ago - how do we deal with this?’”

‘Old economy companies’ with large workforces should pay closer attention to pension funds – “closer than they have in the past.”

Ambachtsheer also said he saw “no future” in defined benefit schemes. But, at the same time, he called for employers who are switching from DB to defined contribution to act carefully and do some “serious thinking”.

Ambachtsheer founded KPA in 1985 and advises governments, industry associations, pension plan sponsors and money managers on pension governance, finance, and investment. He is a co-founder of Cost Effectiveness Measurement Inc.

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