NETHERLANDS - Pension funds should stay away from so-called life cycle investments and instead honour intergenerational solidarity, a panel discussion on the products has warned at the PensionSummit 2008.

Commenting on the panel discussion about life cycle products, Gerald Santing, exiting managing director of the financial markets watchdog AFM, who was closely involved in the indexation communication of Dutch pension funds, said he is against the idea.

Santing, who will leave the financial markets authority on June 1, as part of a restructuring planned for the middle of this year, said: "A pension without generational solidarity is not a pension, it is a product."

Panellist Wouter Pelser, the chief investment officer at MN Services, stressed that solidarity should be high on the pension fund agenda, despite acknowledging that "younger people will look at other investment mixes."

Theo Jeurissen, chief investment officer at the pension fund for the metalworking and mechanical engineering sector (PMT), told delegates at the PensionSummit 2008 in Naarden Vesting last week the Dutch pension system historically has intergenerational solidarity.

But he added: "Economies are inherently uncertain - the question is how do we share that risk, and what could happen if we come into very extreme situations?"

Hans Rademaker, who heads the fiduciary team at the Dutch merchant bank Kempen & Co, said in terms of the ageing population: "We have to look at life cycling, as our pension fund system is in a decumulation phase."

Willem Noordman, employees' representative at the Dutch VB pension organisation, warned pension funds should take into account their members and their members' ages anyway.

Also he wondered: "What do people get who leave the pension fund half way through their life, since young people pay more?," urging pension funds to look at other solutions than life cycle investments, since he foresees the products would give many other problems.

Arthur Docters van Leeuwen, current chairman of the Holland Financial Centre and former chairman of the of the financial markets watchdog AFM, summarised: "As long as we do not have a backpack system, life cycle investing will come. I believe in solidarity, but problems will come."

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