The proposed restrictions have a more immediate impact on larger pension funds, as the smaller ones would not have the capital to invest substantially in alternative investments, Mr. Borgdorff said.
VB officials contend that pension funds are well-diversified and therefore do not require any restrictions. They agree that the industry regulator should only be able to examine asset allocations after they have been set, not before, said Mr. Borgdorff.
The government wants 100% security and that is impossible for pension funds, he added.
ABP officials are conducting their own lobbying efforts. Real estate and alternative investments are necessary for the fund's risk-return profile, alpha and diversification, said Rene Maatman, chief counsel for ABP Investments. These investments are critical in keeping the defined benefit system affordable because of the extra return they generate, which holds down the premiums, he added. ABP had 19% of total assets allocated to alternative investments at the end of 2003.
The April 7 meeting will be the first time ABP officials are lobbying Parliament, although it has had discussions with the Staatsen committee — the government commission advocating the restrictions — and with the Ministry of Social Affairs. ABP officials argue the government's desire for restrictions do not comply with the European Union pension directive, Mr. Maatman said, and he thinks ABP has a strong case, although he said it's too early to speculate on the final outcome.
Alfred Kool, spokesman for PGGM, said the restrictions would have a negative effect on returns. The pension fund is heavily invested in alternatives: roughly 13% of total assets are allocated to real estate; 4% to commodities; and 6% to 7% to private equity, Mr. Kool said. PGGM officials, who have communicated with government officials about the proposals, are confident that a reasonable compromise will be reached, he said.
Officials at the €14 billion, Amsterdam-based Bedrijfstakpensioenfonds voor de Metalelektro, the pension fund for metal workers, has also been active in the fight. They joined with the Stichting van de Arbeid, the Joint Industrial Labor Council, to advise the government on the Staatsen commission recommendation, said Bram van Els, spokesman for the metal workers' fund, who said he believes the changes they've suggested to the government will be followed. Their argument: that pension funds' real estate and alternatives investments should not be regulated if they are its core business, said Mr. van Els. PME has 10% of total assets in real estate and 5% in alternative investments.
Also supporting the VB's lobbying efforts is Theo Jeurissen, director of asset management for the €20.3 billion Pensioenfonds voor Metaal en Techniek, the Hague. Mr. Jeurissen said the government should take into account that some pension funds' core investments are alternatives. The fund has 10% to 12% of total assets allocated to alternative investments.