NETHERLANDS - Peter Borgdorff, head of PFZW, the €90bn Dutch industry-wide pension fund for the healthcare and welfare sectors, has added his fund's voice to criticism of lifecycle investing.

Borgdorff told IPE: "We believe in collectivity and solidarity, and solidarity, as far as we are concerned, also included intergenerational solidarity."

Experts last week warned Dutch pension funds should stay away from so-called life cycle investments and instead honour intergenerational solidarity. (See earlier IPE story: Pension experts say 'no' to Dutch life cycling)

Borgdorff says he finds excluding some from solidarity, and including others, a "problematic idea", however he concedes a broad form of solidarity needs to be reasonable at the same time.

"I can imagine, and this is something we focus on as well, that people who contribute until the age of 45, and thereafter stop contributing, pay too much for their pension - for instance one-man businesses and people who leave the labour market sooner than usual have to bear the consequences," said Borgdorff, though he aruges this is a typical problem.

Breaking a system which is built on solidarity would result in a shift to an individual pension arrangement, and would ultimately result in the growth of individual defined contribution (DC) plans, where all risks are borne by the individual participant, said Borgdorff.

"We, as a pension fund, explicitly do not choose to go that route. We choose the route where risks, such as inflation risk, investment risk and so on, are borne together," he added.

According to Borgdorff, it is not unthinkable to give younger participants a higher build-up for the same premium than older participants, but which is different from a life cycle product which dictates investment results also need to be classified by age.

However, people would need to transfer to such a system, for which there is currently no possibility.

"I foresee that, practically, we will never reach such a point, since we do not have the money to invest in a transfer," he said.

Moreover, it is untrue younger participant are against solidarity, he argues: "They are not, but it should become perverse," said Borgdorff.

He concluded if the Dutch system comes into extreme economic situations, all parties involved need to "bleed" as he stressed "you can never just address one party alone".

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