NETHERLANDS – The implementation of the Directive on Alternative Investment Fund Managers (AIFM) in its current form could result in an annual loss of around €1.5bn (US$2.2bn) for Dutch pension funds, and a reallocation into more traditional asset classes, investors claimed.
In a letter addressed to the European Parliament's Committee on Economic and Monetary Affairs, a group of the country's major pension funds and asset managers said the proposal could "lead to a switch in investment of all positions in alternative non-UCITS non-EU assets to more traditional asset classes like equities and fixed income".
This reallocation would produce an average return of 6.46% - using the maximum return assumptions of the Dutch Central Bank (DNB) for a traditional asset mix.
However, the investors argued the average yield on non-EU non-UCITS alternative investments is 8.84%. The missed yield applied to a total size of €693bn Dutch pension industry would lead to loss in income of €1.47bn, the investors concluded.
In addition, they said: "As the Dutch pension contributions amount to €23.5bn on a macro level, the potential negative impact of the proposal would have to be compensated by raising the pension contributions by no less than 6%."
The investors - who have approximately €500bn of assets under management, 20% of which is invested in AIF - also criticized other aspects of the directive and made some proposals for amendments.
They suggested the directive included "a clear exemption for dedicated pension fund asset managers/service administration companies or for pension fund asset pooling".
They also suggested that current regulations such as UCITS and MiFID could be used in the proposal in order to achieve both simplification and consistency with existing legal provisions.
The same group of investors had already sent a letter at the end of August to the then European internal market commissioner Charlie McCreevy highlighting concerns on the effects of the directive (Global Pensions, September 3, 2009).
The current version of the text is now being discussed by the European Parliament, which has the power to amend it.
The letter has been signed by the following Dutch pension funds and asset managers: APG; PGGM; Blue Sky Group; Philips Pension Fund; Doctors Pension Fund Services; Unilever Pensionfund Progress; Hoogovens Pension Fund; Shell Asset Management Company; Mn Services and Syntrus Achmea.
The Dutch Association of Industry wide Pension Funds and the Dutch Association of Company Pension Funds also support the initiative.
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