Koen de Ryck has expanded his recently published "10 commandments" of pensions regulation (Pensions & Investments, Aug. 23) into a list of 50 ways to run a pension plan.
The proposals by the managing director of Brussels-based Pragma Consulting NV were published late last month in a European Union-sponsored report, "Rebuilding Pensions," that is the result of a year-long survey of the pensions industry in Europe.
The report also has been backed by a broad range of European funds and money managers including Voorzorgskas voor Geneesheren, Tandartsen and Apothekers VZW, Brussels; Robeco Group, Rotterdam, and State Street Corp., Boston.
EU sponsorship does not neccesarily mean the suggestions will be adopted by the Internal Markets Commission, which is busy drawing up proposals for a new directive for European pensions. But Mr. De Ryck believes there is a good chance many of the best practice recommendations will be included.
The 50 proposals provide fairly detailed guidance on the responsibilities of the board of trustees, the security of liabilities and assets, supervision and a prudent-investor approach to investment.
They include suggestions that:
* a pension plan's board of trustees and service providers be licensed;
* the trustees draw up a statement of investment principles that provides detail on at least risk tolerance, asset allocation and return objectives over three years, as well as self-imposed prudential principles;
* liabilities be calculated by an actuary at least every three years;
* assets be calculated at market value;
* currency-matching requirements by EU member states be abolished;
* quantitative restrictions on investments be abolished;
* insolvency insurance for funded plans be prohibited to avoid "moral hazards" such as unnecessary or excessive risk taking; and
* a distinction be drawn between convertible and non-convertible currencies for investments outside the European Union.
