Netherlands Investment and Pensions

Europe’s second largest national pension system is in the throes of a historic shift away from defined ambition arrangements towards collective DC schemes. Many of the larger pension funds, such as PFZW, PMT and BpfBOUW, have already made the transition, which generally includes converting all accrued benefits as well as putting future contributions onto a DC basis. A firm deadline has now been set for 1 January 2028 for all pension funds to transition, and the Dutch Central bank DNB is playing a key supervisory role in ensuring the huge operation goes smoothly. Pension fund portfolios are changing, with interest-rate swaps unwound, bond exposure shifting to shorter maturities and riskier investments becoming more appropriate. Many pension funds are hedging their equities ahead of their planned transition to protect current high funding levels. Communicating what the changes mean for the Dutch public is an important task for the sector, government and supervisors, and there is also an IT challenge in migrating millions of pension accounts.