NETHERLANDS - Small pension funds could extend their board with external professionals, as a way to guarantee their survival as an independent scheme, says Dutch pensions provider and asset manager AZL.

AZL has launched a new governing model, as an alternative to contracting out activities to insurers. A key part of its proposal is an integral approach of pension and asset management. This will enhance the existing connections between both activities, and will stimulate efficiency and costs-consciousness, it said.

According to AZL, it is even prepared to take on board responsibilities, by letting two of its experts – one for pension management and one for asset management - participate.

The AZL staff - on their own, or together with some other governors - could act as the executive committee. The present board will become the supervisory body. This way it will comply with the principles of proper pension fund government of the Labour Foundation, or Star, it explained. The principles will come into force as of January 1 2008.

“Moreover, small pension funds should also check the necessity of keeping all of their specific individualized schemes, which often drive up the costs”, AZL stated. “They will be able to reduce their accountant’s costs, if their provider matches the requirements of the quality mark SAS-70.”

“Administrators and insurers will be much more able to keeping down the costs by standardizing, if schemes differ less. And a more standardized environment will also benefit the use of digital information, as part of the legal obligations to members,” it added.

AZL said it will further work out its model, and ask Social Affairs minister Aart Jan de Geus for comment.

AZL is active for over 60 pension funds in the Netherlands. It is directly involved in the payment of pensions and benefits to 430.000 people. It has €859m of assets and €1.2bn of real estate under management.

Topics