NETHERLANDS - The number of Dutch pension schemes is being cut in half due to the "panic soccer" played by the regulator and parliament, and political manoeuvring is frustrating efforts to improve the pension system, according to Toine van der Stee, chief executive of Blue Sky Group, the pension manager for Dutch Royal Airline's schemes.

He said: "It is obvious the pensions industry needs to professionalise its operations. Pension funds can and must do better, especially with regards to investment strategy and risk management, and they are working hard to achieve the necessary improvements.

"But one cannot expect the pensions industry to do in five years what has taken other financial institutions 25 years to achieve."

Van der Stee said pension funds still had a "ways to go" and that they understood that fact.

"But what irks me to no end is that, every other week, headlines in the papers state that just about everything that pension funds are doing is wrong," he said. "The reason for this, quite obviously, is that the pension supervisors are under enormous political pressure to produce results right away.

"The supervisory agencies pass this pressure on to pension funds. An institution such as the Dutch central bank, once known for its careful, meticulous and non-publicity seeking ways, now tries to make the headlines every day just to show they are indeed alert and actively on the case." 

Pressured by parliament, the pension supervisors - the Financial Markets Authority (AFM) and the Dutch central bank (DNB) - strong arm pension funds into making changes without allowing sufficient time to implement improvements with due care, Van der Stee said.

"Pension funds are being pressured to make a range of changes that have to be implemented right now or even yesterday," he said. "Compared with banks and insurance companies, pension funds aren't doing so bad at all."

The never-ending criticism also undermines morale, he added.

"Actually, what we're seeing is a form of panic soccer, and the result - which I'm seeing everywhere around me - is that dozens of pension funds are considering giving up altogether. Not because these funds are a mess, but because they realise: whatever we do, it is never enough. We are being cut down anyway, no matter how much time, money and effort we invest in improvements."

The fact the number of pension schemes is declining might not in itself be a problem, Van der Stee conceded, but he said he found it extremely worrisome that pension funds were being forced to give up for reasons that were "not legitimate".

He said: "What we're seeing now is pension funds transferring their scheme to an insurer of industry-wide funds out of sheer frustration, just to be rid of the hassle. This is essentially my heartfelt complaint: pension funds are being pushed to make decisions in haste, decisions that may not in all cases serve the interests of plan participants. And after all, it's those interests that the supervisors are supposed to safeguard."

He called on the supervisors to no longer dance to the tune of politics and exercise more care and patience.

Politicians, in their turn, should refrain from making a drama out of every perceived misstep and issue at pension funds.

"If draconian measures are adopted now, a few years from now, we'll have another parliamentary hearing about how things got this far out of hand," he said.

With regard to the new pension deal presently being negotiated by the social partners and the government, he said there was no need to reinvent the system.

"The problem of longevity can be solved by working longer," he said. "The issue of improved professionalisation and communication is already being tackled full force. Besides those issues, our system needs but minor tweaking, which can be handled easily on a decentralised level as part of collective benefit negotiations."

If pension funds would then also be granted some time to fix their solvency situation - a long-term issue, according to Van der Stee - a structural change to the system would not be needed at all, and solvency rates would be "just fine".

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