(April 23, 2012) — Dutch pension fund boards need the same move towards diversity as they have been demanding from corporations, a study has claimed.
Better diversity on pension boards would mean better representation for the fund members and could help steer funds in the event of difficult decisions, a study by Laurens Swinkels and Vinzenz Ziesemer from the Erasmus Research Institute of Management has claimed.
Swinkes and Zeisemer looked at data from the largest 100 pension funds in the Netherlands.
The study said: “We find that boards predominantly consist of males between the age of 50 and 65 years, with six years of board membership. When we compare these characteristics with boards of (inter)national companies, we see that the Dutch pension fund boards have a similar level of diversity. Our research suggests that the large body of research dealing with solutions to increase corporate board diversity can also be applied to pension fund boards in the Netherlands, and potentially elsewhere.”
The study considered a national regulatory push over the last decade to get a broader representation of members on pension fund boards, but said this could still be improved.
It said: “Increased diversity may lead to members feeling more represented, and this in turn may lead to wider support in the case of sensitive decisions.”
There has been growing support for broader diversity on company boards of directors, especially since the financial collapse. This has been a cause taken up by the 30% Club, which has pushed for better representation of women on company boards, for example.
The study said: “Most board members are in the age range between 50 and 70, are male, and have two to eight years tenure. This suggests that successful measures taken to increase corporate board diversity, such as comply-or-explain quota, might be fruitful areas for pension fund diversity as well.”
Across 100 funds, only 38 board members were found to be younger than 40 years old, with no board member younger than 30 years old. The numbers were similar to those reported by the sponsoring company which showed that in 2008 only 2% of board members were younger than 35 years.
In fact, pension boards are increasingly populated by pensioners. The study found more than 18% – or 165 people – of all board members were over the Dutch pension age of 65 years.
The study found board member ages had increased, but only with the average age moving upwards. This, it claimed, could be correlated with the perceived experience brought about with age.
Gender diversity has also been found to be behind the curve in relation to the Dutch workforce, the study found. Out of 896 board members, 793 (88.4%) were male and 103 (11.6%) were female. Women also have a shorter tenure, with only 5.3 years on the pension fund board, compared to 6.1 years for males.
This figure was in line with Dutch corporations, which had 10% female representation on director boards in 2008.