Dutch pension funds have not increased their investments in the defence sector since the outbreak of the war in Ukraine two years ago, to the dismay of the Netherlands’ defence minister Kajsa Ollongren. Pension funds counter that there are currently insufficient investment opportunities.

“I sometimes ask pension funds ‘do you want to be part of the solution or part of the problem?’ At this moment they are part of the problem by not investing in the defence industry,” Ollongren told radio station BNR, which is owned by IPE’s parent company FD Mediagroep, on Wednesday.

Dutch pension funds have not upped their investments in weapons or ammunition manufacturers over the past two years, despite demand for the products produced by these companies having surged as a result of the outbreak of the Ukraine war.

In November 2022 they already resisted a call from the same minister to change that. Pension funds have significantly reduced their investments in weapons in recent years, mostly for ESG reasons.

Pension funds are not amused with Ollongren’s statement, putting back the ball firmly in her court. Eric Uijen, president of technology sector scheme PME, accused the minister of using a twisted logic.

“Dutch and European governments have been cutting defence spending for years. We felt we were safe and a small army was deemed large enough. But if you don’t buy weapons, your defence industry will shrink,” said Uijen. “If you want the industry to grow again, you should place new orders.”

Edith Maat, the director of the Dutch pension federation, told a television show last night of her surprise about Ollongren’s statements.

“We are currently in talks with the ministry about increasing investments in defence. We want to be part of the solution so it’s a bit strange to now have this conversation through the media,” she said, adding that it’s up to the government to take the first step.

“Pension funds don’t buy bullets, so it all must start with a long-term investment plan for the defence industry from the government,” said Maat.

“Pension funds don’t buy bullets, so it all must start with a long-term investment plan for the defence industry from the government”

Edith Maat, director of Pensioenfederatie

If the government makes sure demand for weapons will be structurally higher, then pension funds are willing to invest, she said, noting that there will be no investments in nuclear weapons, cluster munitions or land mines.

Moral appeal

Member of parliament Derk Boswijk, who is also a reserve officer in the army, called it “quite bizarre” that two years after Russia’s invasion of Ukraine, it is still necessary to indicate the importance of investing in the armed forces given “the social role that pension funds also have in this”.

According to Boswijk, pension funds have a moral obligation to invest more. “They make returns to pay our pensions, but those returns can only be realised because we live in a safe society,” he said.

Boswijk said he understood that a moral appeal for funds is “somewhat complicated,” because until a few years back there was pressure from members and society to divest. But, he continued, this happened “in an era when we were incredibly naive”.

He blamed civil service scheme ABP, the military’s “own pension fund”, for refusing to invest in items that military personnel need for their jobs.

An ABP spokesperson responded: “We have been investing in the arms industry for many years. We have participants in police and military, you can’t send them out on the streets unarmed.”

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