Results investment surveys

Date 4 July 2012

De Nederlandsche Bank (DNB) conducted investment surveys at various pension funds into the policies and control environment in respect of alternative investments. DNB welcomes the sector´s on-going effort to improve its control environment. On the basis of experiences in ongoing supervision and the results of the surveys, DNB nevertheless finds that the risk management level not always corresponds to the complexity of the investments.

DNB has informed pension funds about the generic results of the survey by letter on june 22nd. These can be outlined as follows.

  • Many pension funds lack sufficiently detailed strategy and investment guidelines with respect to alternative investments. Moreover, the added value of alternative investments in the portfolio is not always sufficiently substantiated.
  • Some pension funds lack a proper and predetermined selection procedure for alternative investments and asset managers. In addition, the functioning of the investment advisory committee, external asset managers and fiduciary managers is not always evaluated periodically.
  • The reports which pension funds receive from fiduciary managers or asset managers often contain insufficient detail on performance and risk attribution.
  • A considerable number of pension funds lack a clear division of roles and recording of duties and responsibilities of the various bodies in the investment process, including the pension fund board of trustees, the investment advisory committee, the external advisers and asset managers.

DNB expects pension funds to identify any potential shortcomings and address these properly.
DNB will submit a self-assessment framework to the pensions sector regarding the process of investing in private equity and hedge funds. The overall results of the selfassessments will be shared and discussed with the sector to promote the development of good practices. The purpose of the self assessment framework is to provide guidance to the pensions sector and to promote the development of good practices.