NETHERLANDS - Social affairs' minister Piet Hein Donner will commission a study into the investment policy and risk management of pension funds, following the severe impact of the credit crunch on the capital-funded second-pillar schemes.

As part of a broad study into the future of the Dutch pension system, the minister will ask an independent committee of experts to come up with recommendations, to be based in part on factual research produced by pensions regulator De Nederlandsche Bank (DNB.

The minister also said in a letter to parliament that he wants to check whether the financial assessment framework (FTK) needs readjusting to possible structural changes in the second pillar pensions system.

In the minister's opinion, the parameters which pension funds must use to consider the impact of interest rates, equity returns and inflation also need to be reconsidered.

In particular, he wants to address the present mark-to-market valuation of liabilities - causing volatility in schemes' cover ratios - and whether short-term requirements for nominal security come at the expense of real financial security for the long-term.

Moreover, Donner wants to look at whether cushioning of contributions should be allowed any longer, if the pension claims do not even cover the costs incurred.

The minister also said he wants to streamline the present structure of governance of pension funds.

"Research by the Social and Economic Council (SER) has shown an overlap in tasks of some bodies, an increasing bureaucracy and that pension funds are struggling to find qualified members for these organs," he explained.

Donner will also ask his committee to look at legal adjustments on supervision where pension funds have contracted-out core tasks, such as asset management and the administration of pension arrangements.

The minister has already changed regulations to allow the pensions supervisor to directly approach pension providers without the consent of the pension fund.

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