The Dutch Pensions Federation has argued against the position of supervisor De Nederlandsche Bank (DNB) that pension funds should adhere only to the principle of ‘one man, one vote’ on their boards. 

In the DNB’s opinion, the idea that a vote that carries proportionally more weight than other stakeholders’ seats could come at the expense of a balanced assessment of interests and have a negative impact on the dynamics within a board.

It said it could also have an impact on the time available for board activities, as well as on the suitability of board members.

The supervisor said new governance legislation should not allow weighted votes on a scheme’s board.

“The purpose of equal representation is that not one of the parties on a board has a decisive role in decision making,” it said, adding that an exception might be allowed in the case of a vacancy. 

However, the Pensions Federation claimed that DNB’s view was legally unsustainable and undesirable, as it would hinder a board’s ability to govern effectively and efficiently.

The lobbying organisation referred to the Code for Pension Funds, as well as the Pensions Act, which would allow for an exception of the ’one man, one vote’ principle, it said, adding that a number of schemes already worked with such an approach. 

“Pensions funds should, of course, explain their choice, and also make clear how they have taken a balanced assessment of interests into account,” the federation said. 

In its opinion, a well-functioning board does not have a fixed scale, and the quality of the board depends on its members.

The Pensions Federation said it wanted to resolve the issue with the DNB before 1 July, when all pension funds must comply with new governance legislation.

Roos Kuip, the federation’s spokeswoman, said the lobbying organisation did not know the number of schemes that already applied a weighted vote, but added that several pension funds had already pledged their support for the federation’s initiative.