NETHERLANDS - Pension funds should keep a balanced approach to socially-responsible investment, and avoid the over-doing of do-gooding, according to Benne van Popta, chairman of the Association of Industry-wide Pension Funds (VB).
"Despite the €700bn of Dutch pensions assets, on a worldwide scale it is merely a drop in the ocean. What pension funds should focus on is providing clarity on the issues to be discussed, where this should happen and how intensive their involvement should be," Van Popta said in a VB meeting on environmental and social governance (ESG).
"Although it is right to pick up signals from society, we must resist joining the waves of sentiment. Sometimes, not budging is the right thing to keep the pensions system sound," he pointed out.
During the event held in The Hague yesterday, the three pension funds' umbrella organisations (VB, OPF and UvB) presented Social Affairs' minister Piet Hein Donner with a report containing ESG guidelines for pension funds.
Van Popta made clear the recommendations have been drawn up to prevent legislation. "We want to demonstrate that we are perfectly capable of tackling the issue ourselves," he said.
In response, Donner said "the initiative shows that the pensions funds take their responsibility seriously", indicating the government will now take a back seat on the issue of pensions fund investments and SRI.
Although the consumer testing of the indexation label - meant to provide clarity on the quality of future indexation - has not yet finished, the VB chairman warned against a too complicated design.
"Practice shows that one uniform pension statement (UPO) could contain two indexation labels: one for the build-up claims which usually follows the salary index, and one for pension benefits mostly based on the consumers' index," he explained.
Last week, the Foundation for Company Pension Funds (OPF), also indicated it was not impressed by the test results so far.
"If we can't explain this complicated subject clearly, it might be better to stop now, rather than continue the wrong way," chairman Loek Sibbing said.
According to Van Popta, a survey has shown the indexation for 72% of VB members' pensioners has almost been inflation-proof during the period 2002-2006.
The VB chairman also made clear his organisation is backing the proposed additional legislation on the WGA hiatus insurance.
The proposal's aim is to allow pension funds to sell income protection schemes as a disability insurance pension. The Dutch Association of Insurers (VvV) objects to this, because the product is an indemnity insurance which pension funds are not best placed to administer, it argues.
But VB opposes a proposal to create a seat for pensioners on the board of industry-wide schemes.
"It is not desirable that members only represent a part-interest. Pensioners are already represented through the participants' council anyway," Van Popta pointed out.
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