NETHERLANDS - Pension funds will have to “adapt” to benefit from new corporate governance regulations, says the head of the Netherlands’ Corporate Governance Research Foundation for Pension Funds, or SCGOP.
Jos Van Niekerk, director of the SCGOP, told a conference organised by ABN Amro Mellon in the Netherlands of the power of shareholders and the Tabaksblat corporate governance code that is to be implemented in 2005.
He told IPE the checks and balances of corporations should be improved – but pension funds, which he said were well managed in the Netherlands, should also “adapt themselves” to the new times.
“For pension funds it is very important because they have large amounts invested in listed companies. If you look at the typical Dutch pension fund, it will have 40%-45% of its total portfolio invested in companies all over the world,” he told IPE.
“It is important that these companies are managed in a correct way and that there is good supervision of the management board.”
Van Niekerk also told IPE he thought pension funds as shareholders are being given the opportunity to decide on important issues.
“In the last five years markets have gone up but they have also gone down, so the topic of communication is very important,” he explained.
“When I look at Tabaksblat, I hear people say that when pension funds are looking so much after their investments, the right corporate governance, pension funds themselves should be active in the area of adapting their way of management to new times.
“They will have to be sure that their pension fund governance is also up to the levels you might expect.”
Institutional investors should spend the second part of the year deciding on their voting policies and preparing for the implementation of the new code.
He said shareholders’ powers are too limited and that there is a tendency to overlook “an astonishing number” of financial scandals.
Citing the Parmalat scandal, he said shareholders could play a role in the future by refusing to invest in companies with poor corporate governance.
“What I wanted to say to pension funds today, is that they are part of the check and balance system, they are part of the power system and there is a balance of power between the management board, the supervisory board and the shareholder and the auditor also has an important role.”
“Pension funds are relying on the capital market to function all right also for the longer term. It is important that pension funds, which have invested money in corporations, play their roles as shareholders. Maybe that has not be the tradition for pension funds,” he told IPE.
Van Niekerk, the former managing director of the 2.9 billion-euro Unilever Progress pension fund, took over as director of the foundation earlier this year.