There is growing criticism among the Dutch pension schemes about the new rules the pensions regulator is set to introduce next year after the railways fund joined the attack.

Within days after health care fund PGGM’s criticism on the stringent coverage requirements, the railways scheme Spoorwegpensioenfonds SPF has joined the criticism of the DNB, the Dutch regulator.

The railways scheme does not agree with the DNB’s demand that pension funds should invest a larger part of their assets in bonds. “During this period of low returns it will negatively affect the yields”, says the SPF in an explanation of its annual report. “It might even lead to a cut down of the schemes, instead of increasing the security for our members”.

According to the SPF, the new rules of the Financieel Toetsings Kader should not apply to healthy pension funds like itself. “Long-term reviews show that schemes are perfectly able to judging the risks of their investments and to adjusting their investment policy likewise,” it added.

SPF made its comments in announcing its latest financial results. It achieved a 9.1% return – against a benchmark of 8.7% - on its overall investments in 2004. The investment portfolio grew from €9.4bn to €10bn. The coverage ratio remained at 120% based on an interest rate of 2%, or even 165% based on the commonly used rate of 4%. The regulator requires coverage up to at least 130%.

Because of its wealth SPF is one of the few Dutch funds able to pay an inflation correction of 2%, without asking its members costs-covering contributions. The demand of DNB for extra reserves will however suddenly decrease the coverage ratio till under the critical 105%.

“The necessary repairs will require a threefold rise in premiums. Employers and employees won’t be willing to pay”, said director Albert Akkerman. He is in favour of covering the largest possible shortfall of the reserves, instead of stacking different requirements for reserves.

This coverage rate has been another source of controversy. The PGGM scheme recently slammed the DNB demand that schemes with a coverage ratio of less than 105% need to repair the shortage within a year. It says the focus of the regulator is too much on short-term risks.

A spokesman of the regulator didn’t want to comment on the issue before the board’s discussions in April.