De voordelen van arbitrage en forumshopping bij internationale vermogensbeheerovereenkomsten

Prof. dr. Filip de Ly, professor international private law Erasmus University Rotterdam, gave a presentation about the possibilities of arbitration and forum shopping in the international investment management agreements pension funds negotiate with investment management firms.

He recommends a lawyer or legal counsel is not viewed as an external party to be retained in case of a conflict but is part of the management team, with a view to prevent court cases from happening.

There are as many judicial systems as there are countries. Which law should apply to agreements between international parties? The choice fort he applicable law is called forum shopping. The following topics are relevant:

• (i)    Costs. Legal battles in London are expensive. One needs a barrister and a sollicitor. Hourly rates go from GBP 500 upwards. Trials in the United States are expensive as well.
• (ii)    Confidentiality. Court cases are public. Financial journalists will find the filed legal documents.
• (iii)    Lenghth of the procedure. Complex cases can take anywhere between three and seven years, longer in Italy.
• (iv)    Influence over the procedure. There s hardly any influence on how long it takes to resolve a matter in court, as opposed to arbitration.

Advice for pension funds
Prof. De Ly advised to avoid US courts and to exclude trial by jury expressly in contracts on which the law of a US state is applicable. He recommended pension funds check their current contracts on these issues.
A dispute about a business interest of 50 million euro costs 1.5 to 2 million euro on average. These costs can be mitigated contractually. An example is to include a clause about mediation for dispute resolution. A mediation clause states that in case of a conflict the individuals involved try to come to a solution among themselves. Should this not work, the conflict is escalted to management. Often employees wish to avoid having t go to management which might be an incentive to handle the conflict themselves.

Arbitration – advantages

• (i)    Arbitration is private, not public such as court cases
• (ii)    Arbitrators are experts in the field in which a conflict arisis
• (iii)    Arbitration is much faster than a court case (on avergae a year and a half versus up tos even years or longer in courts)
• (iv)    International arbitration awards scan be executed easily thans tot he vast treaty network
• (v)    Under arbitration the procedure remains confidential

In the Netherlands the Arbitration Institute is located in Rotterdam. Other courts for arbitration include the International Chamber of Commerce or the London Court of International Arbitration. Singapore and Hong Kong are also have worldwide recognised centres of arbitration. 

Prof. De Ly suggested that the Netherlands allow English speaking courts to create a market for international dispute resolution.

De gevolgen van EMIR-wetgeving voor pensioenfondsen

EMIR and pension funds

Mark Schilstra, managing director client management at Kas Bank N.V., discussed the impact of EMIR legislation on pension funds.

Pension funds use derivatives to mitigate their exposure to certain financial risks. A risk may be falling interest rates with which pension funds much calculate their cover ratios. 

EMIR legislation is designed to mitigate the risk of interconnectiveness of EU banks which are parties to derivative contracts. If one bank should fail, the legislation aims to prevent a domino effect of other banks that are active in the derivatives markets. The financial interest of the combined derivative contracts is worth about nine times the world’s gross national product.

EMIR legislation states that a central party monitors all transactions with derivatives. Collateral must be reported as well as the derivative positions. Custodian banks are able to report and monitor these positions.

Nieuwe wettelijke bepalingen rondom communicatie door pensioenfondsen

New legislation for communication by pension funds

The Dutch Finacial Markets Authority presented the topics for supervision on pension fund communication in 2014. It is imperative that for communication purposes the point of view from  pension fund participants is taken.

The costs of carrying out a pension plan are connected with the level of service pension fund participants receive but at minimum, a pension fund participant must have a clear view on the nett pension income to be received after retiring from working life. Complex pension plans with all sorts of exceptions stand in the way of clear communication, and make carrying out a pension plan costlier.

Pension fund communication must complement pension fund participants’expecttations. They expect tob e able to maintain thair current standard of life  but might get a different result after retiring from work.

Communication entails more than sending a message. A pension fund should take the point of view of the plan participant. If opportunities arise, a pension fund shoud also mention the risks involved. Pension funds should assist plan participants with their personal financial planning.

It is likely that from 2015, each pension plan participant will be able to check their personal Pension Dash Board. Its objective is to activate pension plan participants to plan fort heir retirement, combing all relevant personal financial information from, amonst others, pension funds.

In 2014 the Dutch Financial Markets Authority will monitor that pension funds carry out their plans as promised, communicating clearly if and how a pension promised to participants, is realised.

Prudentieel toezicht op pensioenfondsen in 2014

Prudential supervision in 2014

Prof.dr. Olaf Sleijpen, director pension supervision at Dutch Central Bank, outlined the supervisory themes for pension funds in 2014. 

• (i)    Implementation of legislation
• (ii)    Sustainability of pension funds’business models
• (iii)    Communication (in co-operation with the Dutch Financial Markets Authority)
• (iv)    Expertise of investment management and risk management in boards of pension funds.

De keuze en implementatie van nieuwe bestuursmodellen voor pensioenfondsen

Choice and implemnetation of governance models for pension funds

Eric Bergamin, pension lawyer, talked about the new legislation aimed at strenthening the governance of pension funds. The new legislation offers five models for pension fund board composition and board member tasks, out of which a a pension fund board must choose one. The decision on the governance model must be well motivated – simply stating that a chosen governance model  bears the least costs or resembles the current situation, won’t suffice.

(Meer)waarde voor deelnemers van pensioenfondsen: de rol van marketing en communicatie boven de wettelijke informatieverplichtingen

Added value to pension funds participants: marketing and communication for pension funds

Annemarie van Hekken, principal at marketing and communication agency Bridgevest, spoke about why pension funds should demonstrate their added value tot heir mandatory pension plan members. That would create support fort he mandatory pension fund system as we know it in the Netherlands. 

Pension funds adhere to the legal obligations for communication about pension to their members. These members are hardly moved to action when it comes tot heir personal financial situation after retiring from their working lives when insight in their financial situation becomes more and more important with declining pension fund results.

Mrs. Van Hekken set out a route how to activate pension fund members.

Bridgevest developed an online tool called On Track with which individual pension fund members can assess their personal financial situation after retirement if their pension fund is connected tot his platform. So far ten pension providers have got access tot his tool, providing financial insight to millions of pension fund participants.

If pension funds were to use marketing they can show and help their members with their personal financial planning after retirement, and maintaining support from mebers fort he mandatory pension system in the process as well.

Human Action voor pensioenfondsen

‘Human Action’ for pension funds

Heiko de Boer spoke on behalf of the Ludwig von Mises Institute Europe about how the theory of the Austrian School of economics works tot he advantage of pension funds if they start seeing their mandatory pension plan members as clients.

Human Action is one of the most important work of the economist Ludwig von Mises (1881 – 1973). The book explains why free financial markets aren’t merely a result of economic variables such as interest rates, inflation, money or wages, but the consolidation of numerous conscious and unconscious choices and preferences from individuals, avoiding negative consequences as much as possible.

Applying his work to pension funds, if pension funds would start seeing their mandatory plan members as clients and start serving them  from that point of view, showing their added value with the best possible results under the given circumstances, mandatory plan participants will maintain their support for and trust in mandatory pension funds. Marketing by pension funds is an essential tool fort his to achieve.

Duurzaam beleggen via partnerschap

Sustainable investing through partnership

Els Ankum-Griffioen, head of business development at Triodos Investment Management discussed how investment categories such as stocks, real estate or infrastructure can achieve extra returns by a sustanable way of investing.

She gave examples that showed how real estate investments may get extra returns if real estate is built in a way that tennants may reduce their energy needs (for heating, for example). A retirement home requiring less energy usage from its tennant thanks to an energy efficient construction, may be more appealing for potential companies to lease, avoiding structural vacancy.

Sustainable investing is a way to improve on financial returns and bringing a positive impact tot he world at the same time.

The Future of Finance

De integratie van risico, governance en compliance

Pensioenen in Den Haag en in Brussel

Pension Funds in ‘The Hague’ and in ‘Brussels’

Dr. Pieter Omtzigt, Member of the Dutch Parliament and spokesman on pensions for political party Christian Democrats talked about political aspects of pensions.

Create insight to plan members by uniform pension plans

Dr. Omtzigt stated that it’s both in the interest of plan members and pension funds to realise uniformity in their pension plans, as opposed to all sorts of exceptions and regulations which make it hard for an individual to assess the financial position after retirement.

It is essetial that an individual plan member understands the financial consquences after retirement. Understanding creates support fort he mandatory pension system we have in the Netherlands. 

‘Europe’, Dutch pensions industry, count your blessings

There are many differences in the 28 pensions systems of the EU member states. Many countries have organised their pensions as an insurance rather than pension as part of the annual salary package. Insurance is subject to EU directives, salary instruments are not. It is of the essence that the Dutch pensions industry understands which essage it wishes it bring tot he attention of the European Commission on pensions, especially as the Commission has got its eye on the Dutch pesions system wit hits mandatory pension funds. For example, in Saudi Arabia oil is important in its international, geopolitical relations, pensions are in the Netherlnds with 1,300 billion euro saved. 

Alarm for Dutch pensions folliwing EU case Hogan / Waterford Crystal

In the case of employee protection if the employer goes bankrupt the European Court of Justice has ruled that the first 45% of an employee’s pension rights will be guaranteed by the state. 

Dr. Omtzigt observed an aar mto the Dutch pensions industry: if the national state will be responsible for pension guurantee of 45% of an employee’s salary, governemnt will take a much closer interest in private pensions, creating a form of a state pensions system which the Netherlands does not have nor wishes.  

Dr. Omtzigt also warned against the creation of large international financial pensions providers for fear EU directives might apply on them, including the mandatory fiancing by these pension providers of European supervisory authority EIOPA.