Some of the latest attempts by the Netherlands' pension regulator to prevent Dutch retirement funds from drifting into what it deems a high-risk zone are causing a backlash among plan executives, consultants and fiduciary managers.
“Pension funds have lost a lot of money” due to regulations, said Anton van Nunen, director of strategic pension management at fiduciary manager Syntrus Achmea, Utrecht. “If (the regulations) continue, pension funds can expect low returns in the foreseeable future, prohibiting decent pension levels,” added Mr. van Nunen, a pioneer in fiduciary management in the Netherlands.
De Nederlandsche Bank, the Dutch central bank that regulates work-based pension plans, has been tightening its grip on the nation's retirement funds since the 2008-2009 financial crisis left funding levels in tatters. But some of the latest actions — including a DNB order to reduce the gold exposure at the €300 million ($422.7 million) Stichting Pensioenfonds Vereenigde Glasfabrieken, Tilburg — has led pension fund executives and their advisers to question whether the regulator might have gone too far.
“Pension fund trustees now see the DNB as the ultimate client, not the pension fund beneficiaries,” said one consultant who spoke on the condition that he not be named. “That's fine as long as the interests of the beneficiaries and the regulators are one and the same in the long term, but this is not always the case.”
A board member of another pension fund who asked not to be identified added: “In everything they do, the first thing trustees are now asking themselves is how will the DNB react to that, not whether it is the right thing” for beneficiaries.
A request to speak to DNB pension supervision officials about stricter enforcement measures was declined. However, in an e-mailed response, DNB spokesman Kees Verhagen said, “In all circumstances, the supervisory culture must be characterized by an intrusive, skeptical and proactive approach.”
In an unprecedented court challenge, executives at the Vereenigde Glasfabrieken pension fund disagreed with the DNB order to lower its gold allocation to between 1% and 3%, which is in line with the average Dutch pension fund's 2.7% allocation to commodities. The fund had 13% invested in gold at the end of 2010. A Rotterdam court judge sided with the DNB on Feb. 8, but fund officials are planning to appeal the decision, according to information provided by the fund.
One manager who requested anonymity said the DNB's focus on comparing pension fund portfolios against peers rather than the fund's own unique goals might usher in an investment climate in which “to fail conventionally is better than to succeed unconventionally.”