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Liabilities are 'only real benchmark'

Roland Van den Brink,
managing director of
investments at the €14bn
PME Dutch scheme, says schemes
should only benchmark against their
liabilities. “Real liabilities should be
our only benchmark,” he told a
recent conference.
And he warned of an “avalanche” as
schemes try to deal with historically
low interest rates. “Interest rates – it’s
not just a pension fund problem, it’s
a worldwide problem,” Van den
Brink said.
He said everybody is trying to deal
with low interest rates and that there
was an “avalanche – everybody is
doing it. There is a first-mover advantage
here. Be prepared for it, that’s
what I’m saying.”
Van den Brink also told delegates
that he expected the new Dutch financial
assessment framework, or FTK,
would probably come in 2007 for
pension funds – although the timing
of the FTK “doesn’t matter too
much”. The central bank has said the
FTK will be introduced in 2006 for
pension funds as planned.
He told delegates he was now
focused on risk management and
tracking error amid the new rules.
“It’s all about risk management,” he
said. “I only have to get that tracking
error – that’s the way things are happening
now in Holland. It’s a glimpse
of what we are doing.”
PME, the fund for metals workers,
needs to generate a return of at least
6.3% a year, he said, adding: “We
think more and more that we’ve succeeded.”
He saw further asset and
country diversification and a focus on
constant risk – not on a constant asset
mix.
“I’m looking at China because
China will be great,” he said. “I
believe there are opportunities
there.” There were also opportunities
in emerging market equities and life
insurance contracts.
He pointed out that the number of
member firms in the scheme has fallen
by 10%, to 1,350, in the last two years.
And he stated that the scheme made
“mind boggling” returns totalling
5.53% on its currency hedging in
2002 and 2003 – although it would
not be 100% hedged forever.

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