NETHERLANDS - The Dutch Association of Industry wide Pension Funds (VB) has proposed a draft code of pension fund governance that includes the creation of a supervisory board made up of employers, employees, pensioners and former participants to oversee pension funds boards.
“At the moment, the board of the pension fund is the final forum for supervision and responsibility,” said Peter Borgdorff, VB’s director. “We want to have an extra board of participants made up of employers, employees and pensioners so that they together can give positive supervision to the boards of pension funds.”
The draft is based on the Tabaksblat code, the Dutch corporate governance code. It proposes, among other things:
- The board of management consists of representatives of employee and employer organisations.- The board of management is accountable to a supervisory board.- The economic stakeholders - including employers, employees, pensioners and former participants - have seats on the supervisory board- The supervisory board is also charged with the supervision of the board of management of the pension fund.- The supervisory board has the power to force the resignation of the board of management in matters of grave importance.- Members of the board of management and members of the supervisory board must meet concrete and verifiable requirements with regard to expertise and education- The external auditor must not be associated with the firm of the external actuary.
Smaller pension funds could find creating an extra supervisory board a burden, while other pension funds have voiced concern over vesting any such board with the power to demand resignations, Borgdorff acknowledged.
“I think it’s more difficult for smaller pension funds than larger pension funds,” he said. “I know that in some pension funds, they have a problem to get enough members for such a board. At the moment, there is an advisory council with participants and they advise the board on several subjects, and some pension funds have trouble to get enough people on those advisory councils.”
ABP recently announced plans to merge their participants and employers councils and PGGM has also established a council with combined representation.
The governance code has been sent to VB’s membership for review and consultation, and concerned parties have until the first week of October to send their comments to the association.