Dutch schemes must do more to push back against EU legislation – APG

The Dutch pensions sector must be much more assertive to counter new and damaging legislation coming out of Europe, according to Guus Warringa, legal affairs chief at the €346bn asset manager APG. 

Speaking at a legal conference in Amsterdam organised by IPE sister publication IPNederland, Warringa called on pension funds to take a tougher position in negotiations.

“The Dutch culture of concluding compromises doesn’t work in France,” he added, referring to Michel Barnier, the French EU commissioner for the regulation of financial institutions.

In Warringa’s opinion, pension funds should use their commercial clout to move things in the direction they want, and he suggested asset managers should unite forces against new European legislation.

He pointed out that APG had already established a lobbying office in Brussels.

However, he warned against cooperating with banks on the issue, “as Brussels doesn’t listen to banks any longer”.

According to Warringa, who is also a board member at APG, pension funds must now comply with 40 different kinds or legislation, mostly originating from Brussels, and triggered by the financial crisis.

“As most of the legislation has been drafted in a hurry and without impact analysis, it often contains unintentional, bad and even contradictory effects,” he said.

APG’s legal affairs chief further chided European legislators for applying a one-size-fits-all approach for all 28 EU member states, ignoring the “unique character” of the Dutch pensions system. 

As an example of a particularly damaging policy, Warringa cited EMIR derivatives rules, which require large deposits in a central clearing system, where assets cannot generate returns.

“EMIR ignores the fact Dutch pension funds deploy derivatives to decrease interest and currency risks,” he said.

“As a consequence, it forces the sector into dramatic adjustments in investment policy.”

He also argued that the new MiFID II Directive, aimed at increasing pre-trade transparency, would increase costs, as it would “inform the markets at an earlier stage about a pension fund’s intentions”.

He also singled out concept legislation for Systematically Important Financial Institutions (SIFI), which would also require pension funds to keep financial buffers.

He said this would pose additional liquidity risks for pension funds.