New pan-European vehicle proposed
NETHERLANDS - Dutch pension schemes could reform themselves to become Europe-wide financial services providers, according to government-sponsored research.
Professors Arnoud Boot and Berend Jan Drijber have come up with a proposal for a ‘General Pension Organisation' (API), which would be a new legal organisation, operating on a European scale and offering a wide range of products.
The only legal requirement for the latter approach is that the board of the respective pension funds will have to hand over their total balance sheet to an API.
The latter would mean that pension fund boards only will have a say in the set-up of a respective pension arrangement, not anymore in the total investment policy.
To prevent opposition of members to this approach, a pension fund could become 100% owner of the API, giving it a say in the management. The positive side of the API approach will be that a pension fund could offer insurance products, until now prevented by law.
It is not clear what the impact of the advice will be. The former government, led by current PM Jan Peter Balkenende, had indicated that the advice of Boot and Drijber would be of importance.
On the other hand, the two academics have argued that the selling of insurance products by large pension schemes should stop.
De Nederlandsche Bank, the regulator of financial services, has already warned ABP and PGGM, the two largest funds, on this.
They have claimed the issue is already resolved by virtue of having hived non-pension services off into separate subsidiaries. But in the Dutch newspapers, Professor Boot stated that such a division does not have any real effects on the market.
"Outsourcing products to yourself doesn't affect anybody", said Boot.
Hans ten Brinke, spokesman for ABP, told IPE the fund will wait for the reaction of the government before deciding on the course to be followed.
He reiterated that ABP still keeps to its strategy of providing the best products and services to its customers.
The life-course option is one of the products ABP wants to be offering via its subsidiary, Loyalis.