NETHERLANDS - The Foundation for Company Pension Funds (OPF) has suggested pension funds should be given the legal option of appointing a professional governing body to be in charge of operational management tasks, instead of the customary board of unpaid trustees comprising employer and employee representatives.
"We can demand expertise from paid professionals, rather than from the representatives of employers and employees," said OPF board member Toine van der Stee when he presented the proposal last week during the pension body's annual conference.
Van der Stee argued that in order to simplify the governance of pension funds, the participants council and accountability body should be allowed to merge into a single ‘stakeholders council' that has weighty competences, such as the right to approve indexation policy, the right to liquidate the scheme as well as appoint and sack the board.
While the proposed professional board would consist of paid professionals, the proposed stakeholders council should, by contrast, be made up of volunteer representatives of employers, employees and pensioners, argued the pensions representative body.
"To offer sufficient counterweight to the professional board, members of the stakeholder council should have similar qualities to members of the supervisory board of a large company," stated Van der Stee, who is also chief executive of Blue Sky, the pensions provider to KLM's pension funds.
He stressed that the proposed pension fund governance model should be optional, offering an alternative governance model to smaller pension funds struggling to cope with all of their governance requirements.
"Many company schemes find their governance structure too complicated and burdening, mainly because they have to find a balanced representation of all stakeholders at several levels," he explained.
"In addition, schemes not only face the practical problem of overlapping activities between the participants' council and the accountability body, but they are also increasingly struggling to find members for all the bodies within a pension fund," said the OPF board member.
In the proposed governance model, the traditional board of trustees would still have a say in key decision-making but would no longer be intimately involved in daily operational management of the pension fund, the OPF has suggested.
The OPF proposals come ahead of an expected announcement by social affairs' minister Piet Hein Donner on the streamlining of pension fund governance.
During the conference, Loek Sibbing, the OPF chairman, also said approximately 90 company pension funds have expressed serious interest in working together in a multi-OPF - a collective pension plan in which several pension funds can place their assets but remain ring-fenced within it.
The OPF has 350 affiliated schemes, which represent the pension interests of two million workers, pensioners and deferred members. Their assets total approximately €200bn.