NETHERLANDS – Roughly half of the 740 corporate pension funds in the Netherlands are set to disappear within the next five years, Dutch bank ING Group has warned.
A study by the Economic Bureau of banking and insurance giant ING said half of all corporate pension funds will cease to exist as a result of increasing regulatory pressure, lower coverage ratios, cost hikes and new financial reporting rules. The study also pointed out a decrease in the number of participants at some individual funds will add to the cull.
The study was presented to the Dutch Association of Industry-wide Pension Funds (VB) and the Corporate Pension Funds Association (OPF), by Pieter-Jan van den Brink, director of ING Wholesale.
“Pension funds are operating in a turbulent environment, which triggers greater economies of scale. If the current trend persists, it will lead to the disappearance of half of all pension funds within five years,” ING said.
At the presentation, OPF director Jeroen Steenvoorden admitted there was a ‘downward trend’, referring to a number of smaller funds managing 100 million euros or less being wound up. “But in the sector as a whole, there is growth,” he said.
For example, there are currently 225 funds managing 100 million euros or more, compared with 173 funds in 1999. Steenvoorden further pointed out a lot of funds are outsourcing some of their activities.