Dutch pension fund provider PGGM has called for like-minded people in the pension fund industry to work with them to act against “unacceptable” fees by external money managers.
Ruulke Bagijn, chief investment officer, private markets, said in a statement on the €186.6 billion ($204.8 billion) firm's website that the financial crisis had raised a debate as to the way the financial system works, or as the case may be, does not work, in the interest of pension funds.
Ms. Bagijn said PGGM wants to move to a situation in which money managers “charge better rates and use restrained remuneration structures, so that they will act in the interests of our clients.” She acknowledged it cannot be achieved in the short term, and that PGGM will focus on “undesirable practices and denounce these to the financial services providers and publicly as well.”
She invited others to follow suit. “We will also search for cooperation with like-minded people in the pensions world to act collectively against unacceptable practices,” Ms. Bagijn said in the statement.
The firm is also expanding its own teams in order to bring more investment management in-house, “and thereby reduce costs,” Ms. Bagijn said.
PGGM manages the assets of the €161.7 billion Pensioenfonds Zorg en Welzijn, Zeist, Netherlands.
As part of its push for better alignment of interests, PGGM published the PGGM Remuneration Guidelines for Portfolio Companies.
Over time, PGGM wants money managers to be more transparent when it comes to pay and remuneration structures; for performance fees to apply to only above-average performance, to be agreed in advance; and that only basic remuneration be paid for the costs and pay of the management of the money manager.
In the statement, Ms. Bagijn singled out private equity. She said concerns remain, “such as when we are able to realize exceptional returns but have to allow high fees to be paid in exchange for this, for example with private equity. This is only acceptable if the pension fund fully benefits.”
A spokesman for PGGM said further details were not available.