Category Archives: Netherlands

Upcoming Talk: Netspar International Pension Workshop

6003007-8-9-2Photo credit: Chiel Koolhaas on Skitterphoto.com

 

On January 25, Tobias Wiß (Johannes Kepler University Linz) and I will be presenting our paper “Pension Funds and Sustainable Investment: Comparing Regulation in Denmark, Germany and the Netherlands” (with Karen Anderson, University College Dublin) during the Netspar International Pension Workshop in Leiden.

Our paper reports the first findings of a Netspar-funded research project on the regulation of sustainable investment by funded pension schemes. In this study, we use insights from comparative political economy and financialization studies to direct attention to the institutional underpinnings of pension schemes’ investment behaviour. The starting point of the paper is the assumption that regulation either incentivizes or discourages sustainable by pension funds. We furthermore assume that the type of regulation present in a pension system is influenced by institutional characteristics, such as the history of the pension system, the capitalization of the second pillar, the vehicles for pension provision, and the mode of governance. The paper employs a broad conceptualization of regulation, incorporating 1) national legislation, 2) regulatory activities by supervisory agencies and 3) self-regulation by the pension sector itself.

In all three countries, there is a growing sense that sustainability is related to (positive) return and that pension schemes, as other groups of politics, the society and the economy, need to take on responsibility for future sustainability, especially in times of climate change. Nonetheless, we do find substantial differences with regard to the regulation of sustainable investment by pension funds: highly developed in the Netherlands, moderately developed in Denmark and underdeveloped in Germany. In none of the cases, legal requirements for sustainable investment exist. Pension investments in all three cases are guided by the prudent person rule, although other rules may exist (e.g. ban on cluster munition in the Netherlands, quantitative restrictions in Germany). The Netherlands stands out as the only case, where 1) the industry has initiated self-regulation on sustainable investment and 2) where the regulator is developing a more all-encompassing attitude towards financial risk, that for instance also includes climate risk. Finally, we find that fund-level activities toward ESG investments are considerable in the Netherlands and Denmark and rather moderate in Germany.

In the coming months, we’ll be revising our paper before it will be published as a Netspar working paper. Keep on an eye on this website or our project page on ResearchGate for any updates.

 

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Filed under Denmark, Events, Germany, Netherlands, Netspar, Pension Funds, Publications

New Article on Financialization and the Pension System

My article “Financialisation and the Pension System: Lessons from the United States and the Netherlands” was recently published in the Journal of Modern European History (Vol. 15, No. 4). The article explores the financialisation of private pensions in the United States and the Netherlands. It proposes two distinct arguments. First, the article shows that both the American and the Dutch pension systems stand out internationally for their high degrees of capitalisation and the absence of substantive investment restrictions for pension funds. The article posits that both pension systems are highly financialised, yet the process of financialisation has proceeded along different historical paths and within different institutional contexts.

Second, the article maintains that the financialisation of pension systems is accompanied by its own political dynamics. In both political economies, different groups of actors (employers, labour unions, financial professionals) have made claims over the growing concentration of pension assets. Here, particular emphasis is given to the role of the state. It shows how since the mid-1970s, both American and Dutch pension funds have altered their investment strategies, abandoning public debt as the dominant investment category.

The article explains this change in terms of the rising popularity of modern portfolio theory and the immense growth of pension capital in need of new investment options. As austerity politics have made governments more dependent on financial markets, pension funds have become more assertive in leveraging their assets and demanding political reform which are in the interest of the financial industries. Financialisation has thus fundamentally altered the balance of power between the state and financial market actors.

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Filed under Financialization, Netherlands, Pension Funds, Publications, United States