According to a Dutch professor and trustee at employment agency pension scheme UWV, pension funds must be wary of lobbying efforts to encourage greater domestic investment at a time of bank deleveraging.
Johan A M de Kruijf, assistant professor at the University of Twente, spoke out against recent calls for pension funds in the Netherlands to take on loan books currently held by the nation's banks. "In the Netherlands, there are discussions about how pension funds can take over some of the work that the banks are not doing – offering mortgages and making loans", he said. "I don't think we will face actual legislation on this, but we certainly see a lot of pressure from lobbying groups, and that political aspect of the role of long-term investors [in the domestic economy] is under direct discussion."
University of Oxford academic Gordon Clark said the most effective way for investors to combat the pressures of financial repression – which speakers outlined as meaning either inflation coming in ahead of central bank expectations, bond yields and bank balance interest rates turning negative, or GDP growth outstripping bond yields – was with a well-diversified portfolio, including alternatives.
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