NETHERLANDS - Dutch pension giants ABP and PGGM have expressed strong opposition to a government proposal to break up industry pensions, deeming the plans "unnecessary".
The Ministry of Social Affairs is considering plans that would force funds to separate policy from management and administrative tasks, with the latter operating on the free market.
While this is already the case for many of the smaller Dutch funds, the e160bn ABP and e57bn PGGM argue the move would have far more disadvantages than advantages for funds of their magnitude.
Alfred Kool, spokesperson for PGGM, the pension fund for social and healthcare workers said: “Our opinion is that in the case of a limited number of very big funds like ABP and PGGM you should think very well about what are the advantages and what are the negative effects if you would force those funds to separate their existing organisation.
“The existing organisations of PGGM and ABP are very professional and there are a lot of advantages to have them continue that basis for operation.”
Kool said the proposal would destroy the fund’s economies of scale.
“We produce products and services which are very much in line with the demands of [the healthcare] sector,” he said.
“If you would split that up that will make the price of the product higher because whether it is a commercial party or not, another party will have to deal with the same things we already have dealt with for more than 30 years to make it work again.”
He added: “A lot of checks and balances and education issues are already very much in place with the bigger funds.
“We have a maximum of transparency in all kinds of procedures so everything the government wants to achieve within the pension funds industry is already in place if I look at the situation in PGGM. There is no need to improve that by a very tense reorganisation.”
Hans ten Brinke, spokesperson for Europe’s biggest pension fund, ABP, said separating pension policy from execution of the scheme would lead to higher costs.
The Ministry has asked the Labour Foundation to give advice on the plans and ABP and PGGM have requested permission to participate in the discussions.
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