EUROPE - A Dutch asset management firm has called on regulatory authorities to allow pensions funds to focus less on funding ratios and permit investments which improve corporate debt liquidity.
Roland van den Brink, member of the management committee at Mn Services, warned delegates at the MultiPensions conference in London today the financial crisis could be much more elongated than market commentators might hope, but argued stressed pension fund could play a major role in any recovery if they were allowed to help improve market debt liquidity.
More specifically, he suggested by stepping in to help companies, pension fund could in turn help their own financial positions and prevent a possible pensions crisis further down the road.
"Is regulatory reform the true solution to this crisis? I doubt it. The true crisis is liquidity," said van den Brink.
"Ordinary firms are going bust simply because they can't get credit from banks. Each day that situation gets more serious. So we should ask governments and regulators to throw away thinking on funding ratios and find ourselves a way to move pension funds so they can step in to tackle the liquidity crisis.
"In today's world, people are fearing for their jobs so they don't at the moment have a pension problem. They have a problem in their personal lives. We should help them in the pension fund community and ensure the liquidity crisis does not become [our crisis], continued van den Brink.
He referred, in particular, to the Dutch steelworkers' pension fund, PMT, managed by Mn Services, is seeing some of its employer sponsors struggle and go under.
As well as raising concerns about potential contribution problems should employer sponsors no longer exist, he also argued talk of a quick recovery could be hasty.
"We have a very deep problem and a very deep recession. Despite the face that the crisis will be overcome, the '74 [financial] crisis lasted eight years and equity markets were down until '82. Even in today's view, the 3-5 year horizon could do a lot of harm," continued van den Brink.
"By my nature, I am an optimist but 27 studies of crises found in all crises there is always a second lag. The first phase is recognising [the crisis] and second lag is [people are] forced to do something about it. In today's markets, we have not just a financial crisis but a housing bubble crisis and probably very soon a credit card crisis. We are probably moving from too big to fall to too big to save. I don't think governments are able to save us all. So we need to think of other big steps moving forward."