NETHERLANDS - An upscaling of small and average-sized pension funds through some form of cooperation could improve governance and drive down costs, according to consultancy PricewaterhouseCoopers.

In a report commissioned by the Association of Company Pension Funds, PWC recommended the development of a joint governance bureau should be promoted alongside with the option of other pension funds joining a larger company pension scheme and the general pension institution API.

At present, the Pensions Act does not allow a company pension fund to cover unrelated schemes, or to ring-fence assets of individual schemes.

And during the past decade, the number of company pension funds still in existence has decreased by one-third to 620. At present, 150 - mostly small - schemes are in liquidation, or are considering doing so, PWC found.

Although the invested assets of company schemes have doubled in the same period, their total market share is decreasing.

According to PWC, company schemes are usually smaller than industry-wide schemes, and have higher implementation costs on average.

Pensions regulator De Nederlandsche Bank has also found a 1% increase in the number of participants results in a 0.63% costs increase for such schemes, director Arnold Schilder noted during the OPF congress this week.

Pension schemes should consider establishing a management board and a pensions bureau directly employed by the scheme, to raise schemes' professionalism in implementation, board support and the guidance of external service providers, PWC recommended.

Any development of alternatives, aimed at cooperation between schemes, must take into account "emotional aspects" as well as the individual character of the scheme, researchers also advised.

They found costs are usually of relatively little importance when choosing a pension provider. But since company schemes increasingly contract out tasks, keeping their independence is very important, researchers stressed.

The survey suggested all stakeholders expect to gain more satisfaction by taking the company pension fund route, than with insurers. However, a comparison between company schemes and insurers is difficult, PWC made clear, because of the difference of their respective pension products and company model.

The report is based on a survey of stakeholders in company schemes, experts' opinions and literature, PWC said.