The Dutch Association of Industry-wide Pension Funds, the VB, has criticised the government’s backing of the Staatsen Commission review of pension funds’ commercial activities.
“It is extraordinary that the Junior Minister has taken up the Staatsen Commission’s recommendation that specific activities, which fall within the definition of core business, should be subjected to additional regulations,” says VB director Peter Borgdorff.
The comments are in response to a letter from state social security minister Mark Rutte’s which backed the Staatsen Commission advice concerning funds’ secondary activities.
“Such extra regulations would obstruct pension funds in their core business, which is to achieve maximum yields in order to provide their members with the best possible pensions,” the Vereniging van Bedrijfstakpensioenfondsen, the VB says.
The government-backed commission proposed that funds must ask industry regulator Pensioen- & Verzkeringskamer to exempt certain categories of investment and participating interests.
The VB called such measures a “form of preemptive supervision that is inconsistent with the prudent person principle with which the Netherlands is obliged to comply under the European Pensions Directive”.
It says this “no, unless” approach offered no safeguards for sound business practices and responsible investment policies on the part of pension funds. It says it would push up administration costs and overall operating costs.
Rutte has mistakenly treated the calculated risks associated with normal investment activities as entrepreneurial risks, the VB says.
The VB adds that Rutte was provoking uncertainty about the nature and relative scale of authorised activities (investment or otherwise), as well as about the phasing out of such activities and about the tax liability of such activities.
“These ambiguities alone are enough to prompt auditors to mark down the value of assets.”