Pension legislation encourages risk-seeking investment policy

Laurens Swinkels, , Assistant Professor at Erasmus School of Economics and Director Quantitative Research at Robeco

Laurens Swinkels, Assistant Professor at Erasmus School of Economics (and Director Quantitative Research at Robeco) is one of the authors of a Dutch written opinion article which has been published on the website MeJudice.nl.

In the article, the authors argue that the required equity for pension funds and insurers for investments in shares does not take into account financial-economic risks within this asset class. This leads to incentives to invest in a risk-seeking way and can contribute to inefficiencies in the pricing of shares. The authors propose an alternative that gives a better assessment of risks and also removes the perverse incentives. This alternative is derived from European regulations for investment funds for private investors.