NETHERLANDS - The chief economist at Europe's second largest pension fund, the 47 billion euro Dutch health and social service PGGM, says the European Pension Fund Directive has opened up "irresistible" opportunities for all European pension players.

"The opportunities across borders will become irresistible for all of us," said PGGM chief economist Peter Kraneveld, in response to a question about whether the European directive on occupational pensions that was passed by the European Parliament recently would enable PGGM to operate a pan-European sector fund.

The directive offers PGGM a pan-European "framework", he said. But there were obstacles, such as taxation, to be overcome first. But Kraneveld, who advised on the directive, conceded that it would be corporate pension funds, not sector funds that would first benefit from the directive.

He said he was "surprised" that governance was not included at some point in the directive. "Decisive steps need to be taken," to improve governance, he told the International Fund Management Conference in Amsterdam today. The important thing, he said, was to get pensions on the agenda, though he wouldn't be surprised if the directive did not have an immediate impact.

Rather, he saw the directive having a more long-term influence. Within 15 years, he said, the European pensions landscape could be "considerably different".

He called for pensions reform as quickly as possible. "You have to act as quickly as possible," he said. "The longer you delay reform, the longer the cost is going to be."

Kraneveld also expanded on his views about asset allocation. "Property is the asset that has the most potential for expansion," he said. He said he would like to see the development of secondary instruments that would enable institutions to go long or short in real estate as an asset category. Hedge funds, he said, were of "marginal" importance, as a hedge fund's return in the end - if one believes in efficient markets - is bound to be zero.

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