IPE Netherlands Briefing: The long pensions transition process

The long transition process underway in the Dutch occupational pensions sector passed a key moment this month when the largest pension fund got the official go-ahead for its plan to put accrued pensions onto a collective defined contribution (DC) basis.  

Earning a green light from the Dutch central bank DNB had not been altogether straightforward for ABP though, having been asked at one stage to provide further substantiation for its net benefit analysis, ABP executive board member Yolanda Verdonk-van Lokven told IPE’s sister news service Pensioen Pro.

She sighed that the request for deeper analysis had come in on a Friday afternoon with a deadline of Monday morning, but also said she didn’t recall any real conflict or arguments with DNB in the approval process.

But she did reveal that the €518bn scheme for civil servants has not decided to hedge its equity risk in the six-month run-up to the transition – a protective measure some other pension funds are taking. 

Funding ratios at Dutch pension schemes yet to convert to DC are being closely watched, as they determine how much can be distributed to participants on conversion day. At the end of May, ABP’s funding ratio stood at 126.6%. 

But friction is inevitable between supervisors and the supervised, especially in an exercise as far-reaching and long-lasting as the Netherlands pension reform.  

Recent “heated discussions” at an event hosted by AFM, the Dutch Authority for the Financial Markets, for the pensions industry were an example. Reportedly, the Federation of the Dutch Pension Funds (Pensioenfederatie) took issue during a breakout session on cost transparency with the AFM’s plan for how pension costs should be communicated to scheme members in the new DC system. 

As a result, the AFM and the sector started new consultations on the composition of the Uniform Pension Overview (UPO) for WTP-compliant schemes.

While stock markets are relatively buoyant right now, Pensioenfonds Huisartsen, the Dutch pension fund for general practitioners (GPs) has halted its plan to shift its equities to a concentrated portfolio of around 70% stocks - citing the “great uncertainty” in financial markets as the main reason. 

The GPs’ pension fund has yet to transition to DC – it plans to do so at the beginning of 2028, which is the latest date allowed under the law.

Items to note:

• International pension expert Hans van Meerten warns in an opinion piece on IPE.com that the Dutch government’s response to the EU ruling exposing pension protectionism in the Netherlands is “too slow and probably still too narrow”.
• Lars Dijkstra, PGGM’s CIO, and Andres van der Linden, senior stewardship specialist, have set out recommendations for the upcoming review of the EU Emissions Trading System. “The first priority is to safeguard the integrity and predictability of the carbon market,” the men write in a column on IPE.com.

Rachel Fixsen

Nordic and Netherlands Correspondent