The proposed Capital Markets Union (CMU) will only be successful if supervisors take a flexible approach to risk, thus allowing pension funds to pursue investments that boost economic growth, the Dutch Pensions Federation has argued.

In its response to the European Commission’s consultation document, the lobbying organisation said it wanted more clarity about how supervision would deal with illiquid investments as well as with investments that were difficult to value.

The same went for how much leeway pension funds would get for adjusting their strategic asset allocation, it said.

The federation further stressed that considerations of risk and return must remain the decisive factor for investment decisions, and said the CMU should take into account differences between institutional investors.

“As the Dutch pensions sector is able to generate specific expertise on infrastructure, uniform European solutions should not be the first option,” it contended.

The Pensions Federation further indicated that banks should keep a role in investing.

In other news, the Dutch fund and asset management association (Dufas) has presented updated recommendations for fiduciary management.

Some added principles stipulate that asset managers explain their business model, fee structure and instruments used to their clients, whereas pension funds should provide clarity about their investment beliefs.

Toine van der Stee, chairman of Dufas added: “Pension funds must also ascertain the quality of the asset manager, including its ISAE certification.”

Hans Janssen Daalen, director of Dufas, underlined that asset managers wanted to know their clients’ risk attitude and investment beliefs in order to make matching investments.

The updated recommendations – improving on the principles first published in 2008 – could also help a pension fund’s accountability organ or internal supervisors to check how outsourcing had been organised.

Van der Stee, who is also chief executive of Blue Sky Group, said: “A board must be able to explain why, for example, it deviated from these fiduciary principles.”

In his opinion, the new rules would ensure that a pension fund’s board remained in control, and that the principles would prevent misunderstandings caused by different cultures.

“Sometimes a trustee expects too much from an asset manager as a ‘prudent father’, which is not a familiar conception with Anglo-Saxon asset managers,” he said.

“Therefore, it is better to specify expectations in a contract.”