Insurance firm Aegon has paid compensation to a group of retired customers because it had increased the interest rate hedge of their pension product excessively.

A spokesperson for Aegon confirmed this after the trade publication for the insurance sector AM had reported the matter. The compensation, which amounts to about 10% of pension capital, has been awarded to retirees who had bought a pension product with an aggressive risk profile.

Aegon had increased the product’s interest rate hedge at the retirement date from 45% to 85% in the summer of 2021. That turned out to be poor timing as interest rates rose sharply the following year, after the outbreak of the war in Ukraine and the inflation spike that followed.

The 10-year swap rate, which was still around 0.1% in July 2021, stood at approximately 3% at the end of 2022.

Because of the high hedge, Aegon customers only benefited to a limited extent from that interest rate rise. In fact, their benefits were cut by 16-20% in early 2023 because of losses on equities, to which the product had a 67% exposure.


The performance of the Aegon product contrasted sharply with benefits paid out by pension funds, which saw their funding levels rise during 2022 and were able to grant substantial indexations in 2023. Many benefit products of other insurers also managed to increase payouts in 2023, according to a survey by research firm Bell.

In a written response, Aegon said the interest rate hedge increase had been implemented in 2021 “to limit the impact of interest rates on benefits”. The insurer declined to comment on the unfortunate timing.

In retrospect, such a higher interest rate hedge was not “in line with the [aggressive] nature of the product,” Aegon added. After all, the customers had chosen an aggressive profile, implying that they did not want to hedge all risks, in order to keep more upside potential.


For this reason, Aegon – that was acquired by another Dutch insurer, ASR, last year – made a correction. The change in interest rate hedge that had been made in 2021 was “neutralised” and a corresponding amount was added to customer accounts.

In practice, this amounted to about 10% pension capital. The additional payout is contributing to higher benefits in 2024, which rise sharply this year, by 20-28% thanks to buoyant equity markets.

Aegon declined to say how many customers have been compensated and how much money was involved.

In September 2023, interest rate hedging in the aggressive profile was reduced back to 45%. Concluding Aegon’s variable benefit product has also only been possible through advisers since then.

This article was first published on Pensioen Pro, IPE’s Dutch sister publication. It was translated and adapted for IPE by Tjibbe Hoekstra