UK unions should call for Dutch pension model-study

* Dutch collective pension feasible in the UK-study

* Model could boost UK pensions by at least 50 pct

By Cecilia Valente

LONDON, March 3 (Reuters) - British trade unions should call for employers to pull together their pension funds on the lines of the Dutch model in a move that could boost pensions by at least 50 percent at no extra cost, a leading fund manager said.

Trade unions have so far focused on staving off the increasing shift from generous defined benefit (DB) pensions to cheaper defined contribution (DC), but have overlooked collectivisation of DC schemes, said David Pitt-Watson, executive chairman of Hermes Focus Asset Management, which is part of the fund firm owned by the BT (BT.L) pension scheme.

In an article written for a report published on Wednesday by trade union think-tank Unions 21, Pitt-Watson said collective defined benefit pension schemes like those run in the Netherlands could represent a way forward.

By adopting the Dutch model which pulls together DC funds, instead of running them individually, employers would reach a critical asset size allowing cost cuts, he said.

He estimated that this would increase pensioners' income by 50 percent and more, basing his assessment on a study by a former U.S. trade unionist.

"This is a business case. It is the lowest cost way to provide the best pensions. I believe in markets; usually if you offer better products people beat a path to your door and in lots of circumstances this would be a better product," he told Reuters.

Pitt-Watson conceded that UK legislation applies "the full rigour of DB rules and regulation" to any pension vehicles that is not run as a conventional DC, but quoted pension lawyer Robin Ellison who said collective DC could be feasible.

Ellison, who has set up a political party to lobby for pension reform in the next government, said: "We think it is doable without a change in the law, provided you draft it carefully.

"Collective DC in the UK should not give out annuities out, they would have to buy external annuities."