Pension funds in the Netherlands will soon benefit from less red tape and be able to concentrate on their core business of providing retirement benefits, according to the Dutch Government.

The Ministry for Social Affairs said new legislation aimed at improving pension scheme governancewas necessary due to the complex rules and regulations which schemes now have to work with.

Minister Henk Kamp, in a statement on the legislation, said: "We're not only thinking about governance issues per se but also about matters such as responsible investing, the effects of the financial crisis and the ageing population."

Pension schemes, he said, needed to be more professional if they were to deal with these more complex issues. He added that the government will start to enforce regulation which will require occupational schemes to install a mandatory supervisory board.

The new law will also result in executive pension fund committees being made up of external managers, with a scheme's pensioners automatically being entitled to a place on the committee.

Currently a board should exist of employee and employer representatives. The members are appointed by the employers organisations and social partners (as employee representatives). Normally the divide is equal. Some schemes also allow other representatives, such as pensioners, to sit on the board – they then take up employer seats.

Schemes will be able to add external advisers to the board or create a committee entirely existing of purely external advisers which will then in turn be checked by a group of employees, employers and pensioners.

On ESG issues the government also explained that it wants to see it become mandatory for schemes to report on how they deal with these matters in their annual accounts.

The new regulations have been met with mixed responses. Some schemes, such as PMT, say they already work with external experts and pensioners on the board to improve governance, and welcome the changes.

Others, such as the Federation of Pension Funds say the government should not interfere. The federation told Dutch public broadcaster NOS that governance and boardroom composition issues should be down to individual schemes.

azeevalkink@wilmington.co.uk