NETHERLANDS - The Dutch €1.1bn industrywide butchers' pension fund has clashed with pension regulator De Nederlandsche Bank (DNB) over demands to cut the scheme's real estate holdings.

The fund has long allocated a large part of its portfolio to real estate and has currently invested nearly 40%, mainly in direct holdings.

This makes it the third highest holding in property among Dutch industrywide funds, according to data to the end of 2005.

With this year's introduction of the new assessment framework FTK, obliging pension funds to diversify more, the fund has been told to reduce its real estate holdings to a maximum one-third of entire investments.

The scheme, administered by Interpolis, is now holding talks with the DNB. It says it is confident that it will be allowed to continue its relatively high investments in the asset class.

The fund acknowledges that real estate is no investment panacea and should be looked at with caution, but argues that the asset class traditionally has served the fund well.

Henk van der Meer, chairman of the fund, confirmed to IPE today: "We are still in talks with the DNB about this issue."

He declined to give further comments, as he is currently discussing the matter with the fund's manager Interpolis.

Erik Erenst, director of direct real estate at Interpolis, also declined to comment, saying: "We execute what the governing board tells us to do, so it is not in my place to comment."

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