NETHERLANDS - Social affairs minister Piet Hein Donner will establish an independent committee to find out whether the investment policy of pension funds has landed them in their precarious financial position following the credit crisis.

Donner said yesterday during a parliamentary plenary session debate: "We must learn lessons from what has happened and adjust asset management if necessary."

At the same time, however, the minister stressed he has not see anything to indicate pension funds have taken any irresponsible investment risks.

He also promised to reconsider the parameters for the long-term interest rate set for calculating schemes' liabilities, as the volatile - and at present low - swap rate is substantially increasing liabilities and driving down schemes' cover ratios as a result.

That said, Donner did also say he would be unwilling to keep changing the required standards for pension funds.

"It was the pension sector itself which opted for the swap rate a few years ago," he reminded parliament.

The minister indicated he expects the structural pressure on pension funds to remain "as long-term interest rates have been decreasing for 15 years and life-expectancy is still rising".

Similarly, fellow ministers agreed when Donner added the five-year recovery period for underfunded schemes must not be extended any further.

The minister explained pension funds which are unlikely to recover within this period must decide whether to cut benefits before August 2010, as a start of a gradual recovery process.

The progress of all schemes in a recovery process will be checked by regulator De Nederlandsche Bank every year as part of a tailor-made approach, according the minister.

"Only if it becomes clear that the mapped-out route to a timely recovery is not sufficient should pension funds decide whether to discount benefits within a year," he added, though stressing if that is necessary he would prefer to see a gradual reduction of benefits, rather than one large cut.

The minister also said a two-year rise of the official retirement age of 65 would not solve the present problem for pension funds, as their present position is related to current pension contracts.

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