Frijns: change the structure not the strategy

NETHERLANDS – Jean Frijns, the former investment chief at Dutch civil service fund ABP, has outlined his thoughts on how the Dutch pension fund structure should be amended.

Frijns, now chairman of the Dutch corporate governance committee, noted that the risk allocation is rather “diffuse” in the Dutch system – that’s to say it was not clear who the economic owner of a pension fund is, the sponsor or the member.

“The structure doesn’t reflect the economic reality,” he told the inaugural online IPE-Symposium. He argues that since it’s the participants are the real risk takers they are therefore the economic owners.

“But on the balance sheet they appear as debtors,” he said. “So the balance sheet doesn’t reflect economic reality.”

“We should stick with strategy and fix the structure.”

“Current DB models look riskless for participants but they are not.”

He highlighted the growing tensions between the generations in the Netherlands and warned that the situation could become more tense if the problems aren’t solved.