NETHERLANDS – The so-called ‘prudent person’ principle of investment remains at the heart of the new Dutch code of pension fund governance.
“The governing body adheres to the prudent person principle as the basic premise for its investment policy,” the 27-page code states, referring to the governing body of a scheme.
“The core elements here are the general duty of care with regard to investment policy and the return-risk profile of an investment portfolio.”
“In the event of a conflict of interest between the participating employers and the other stakeholders, assets are invested exclusively in the interests of these other stakeholders.”
The new code, originally unveiled last month and now published for the first time in English, states in principle: “The governing body of the pension fund has sufficient expertise to prescribe investment policy and to assess its implementation.
“If such expertise is not structurally available within the governing body, the governing body contracts out the management of fund assets.”
External asset managers can be used “on condition the governing body has sufficient qualifications and experience” to select and assess them. “If the governing body does not possess such expertise on an enduring basis, its choice falls on reinsurance.”
The code adds: “Investment policy should be clearly defined, whether or not in a provision of the articles of association. The governing body should not adopt this policy before the board of stakeholders has had the opportunity to submit recommendations thereon.
“The governing body should comply with the requirements of the Pensions Directive concerning a written statement of investment principles.”