NETHERLANDS – Peter de Koning, a former member of the Tabaksblatt corporate governance committee and current pension manager, says the overall governance of Dutch pension funds could be improved.
De Koning is currently chairman of the pension fund for protestant ministers. There was a lack of openness towards the media, stakeholders and their respective members, De Koning told a meeting organised by consulting firm Watson Wyatt recently.
The possibility of a potential crisis of the magnitude of a WorldCom or Ahold in the Dutch pension fund industry was still possible as long as full pension fund governance is not implemented.
De Koning also indicated that governance was necessary as pension funds have high investment risks to take, especially in relation to their equity investment decisions.
Under Dutch pension law, fund board members can be liable for mismanagement and taken to court if necessary. And the increased call upon pension funds to become more active in their respective voting behaviour at shareholders meetings also has increased the need for governance.
De Koning expects that the American legal possibility of taking class actions against corporations could become a normal fact of life in the Netherlands as well in the coming years.
Watson partner Gerard Roelofs addressed the increased role of governance in the investment structure of a pension fund.
He stated that without any governance structure, a pension fund would not be able to reap the highest results in the end. The ‘governance gap’ had increased over the last few years due to increased investment complexity and a growing lack of capacity.
The fact that pension funds have become worldwide investment funds had increased not only the potential risks but additionally the need for governance.
If Roelofs’ assessments are right, it seems that most Dutch pension funds will have to change their current structures dramatically. However, current traditional forms will need time to adjust to a changing world.