The Dutch pensions industry is facing substantial job losses of up to 30% or more as the number of pension funds in the Netherlands continues to decline.
The number of schemes has fallen from 688 in 2008 to 372 today, and there is no end in sight – according to financial supervisor De Nederlandsche Bank (DNB), another 120 schemes are presently winding up or have indicated their intention to do so over the next few years.
The regulator recently suggested that at least 60 more may be unsustainable in future.
At this rate, the number of schemes will dip below 200 within the next few years, and the decline seems certain to affect employment in the industry, ranging from consultants to asset managers and professional trustees.
According to Jan Jaap Dahmeijer at the DNB, the regulator has not yet conducted any research into the matter, but he said he was convinced the impact would be substantial.
“The changes may be more significant than we now realise,” he told IPE sister publication FD IPNederland.
Experts believe ongoing consolidation will lead to up to one in three jobs in the industry disappearing over time.
Martijn Vos, director of pensions and risk management at Ortec Finance, told FD IPNederland: “In five years’ time, perhaps one in five jobs will have been lost. One in three jobs is a fair estimate in the long run.”
Theo Kocken, chief executive at Cardano, agreed.
“It would not surprise me if some 20-25% of jobs in the industry disappeared over the next 10 years, and that number may rise to one in three jobs in 20 years – or possibly sooner,” he said.
Kocken said smaller schemes would be hit hardest, and that the services of consultants and actuaries for this segment of the market would be needed less and less.
He added: “Asset managers are less vulnerable to the effects of consolidation, as they are paid based on assets under management, although asset managers of course cannot escape the fact they are part of the financial services sector – which, as a whole, will be shrinking for the next 10-15 years as a result of deleveraging.”
Only the legal profession will be spared, he argued.
“Considering the many regulatory changes, they will likely have plenty of work going forward,” Kocken said.
However, the worst job losses are not expected to materialise for another five years, according to Vos.
Initially, the rising number of pension schemes winding up will actually create more work for consultants of all sorts.
“In addition, there’s the greater focus on risk management, communication with plan participants, adjusting schemes to fiscal and regulatory changes and so on,” he said.
“So it will be a while yet before we start to see a serious decline in employment opportunities.”
If the consolidation trend were to accelerate, however, the numbers are likely to be more grim, says Dries Nagtegaal, a professional trustee with the corporate Sabic scheme and metalworkers fund PME.
As more and more schemes are forced to contend with falling numbers of active participants and thus falling contribution levels, more schemes – including healthy schemes with solid funding ratios – must consider winding up to safeguard the long-term interests of their participants, he said.
Nagtegaal pointed out that the majority of the top 100 Dutch pension funds are facing these or similar issues today.
“If the number of remaining schemes were to drop to 100, this would mean that 50% of the business in the industry will be lost,” he said.