Short-term regulatory demands are leading pension funds into damaging cyclical behaviour, according to Peter Hadasch, head of the €780.6m corporate Pensionskasse for Nestlé Germany. Talk about tighter investment caps for risk assets like equities and alternatives in the wake of the financial crisis led to vociferous opposition among German institutional investors.
But Hadasch thinks those critics were on the wrong track. “Those who are whining are not even using the maximum allocations currently allowed – what should really be discussed is the review period,” Hadasch told IPE. In fact, stress tests imposed by the financial regulator BaFin make Pensionskassen suffer, he said, as they force them to adopt cyclical behaviour.