NETHERLANDS - Umbrella organisations for the Dutch pension funds have launched a new code of conduct, which is more principle-based than the earlier ruled-based regime.

This new code is in line with the recent risk-based legislation and supervisory process, which have replaced the rule-based approach, according to professional bodies behind the code- the Association for Industry-wide Pension Funds (VB), the Foundation for Company Pension Funds (OPF) and the Union for Occupational Pension Funds (UvB).

Moreover, the previous distinction between pension funds with a transaction volume of more or less than €20m has been dropped, following a similar change in the legislation.

According to the bodies, pension funds are increasingly being called to account for their integrity policy by both external parties and their own participants, and this has raised expectations on all individuals working at a pension fund to be more professional and reliable when meeting duties.

In addition, new supervisory rules (ETGT) prescribe schemes must have an adequate administrative organization and internal control mechanism, to secure independent acting on the markets and to prevent insider trading.

Pension funds must assess the potential risks and take the necessary measures to manage these risks. However, they are not allowed to deviate from legal definitions on, for example, foreknowledge and integrity risk, as well as for insider trading and supervision of personal trading by individuals working for the pension fund.

This new code also contains rules for reporting conflicts of interests, a key element being it is up to pension funds to add a whistleblowers' clause.

Under the new code of behaviour, the board must define, for example, who are associated persons and who are insiders, work out the norms for corporate ethics and ensure their providers apply a code of conduct.

Schemes are also required to set rules concerning the acceptance of gifts and additional functions, and to establish the responsibilities and competences of their compliance officer.

After consulting the pension supervisors, umbrella organizations anticipate the behavioural watchdog - the Authority Financial Markets (AFM) - will base its approach on how schemes implement their code of conduct.

"For the time being, pensions supervisor De Nederlandsche Bank has decided not to add rules to the code of conduct," VB, OPF and UvB said in a statement.

"However, we expect increased supervision in case the code is being implemented free of engagement," they added.

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