The Dutch pension fund for retail workers has bought a put option to hedge most of its equity risk in a bid to protect its currently high funding ratio ahead of the transition to the new defined-contribution (DC) system — despite having rejected such a measure last year on cost and complexity grounds.
The €32.9bn Pensioenfonds Detailhandel plans to transition its pension contracts to the new system on 1 January 2027 – a year after the January 2026 transition date it had initially assumed, and the decision to hedge equity risk is related to this change of plan.
In view of the postponement and the pension fund’s “robust financial position”, Pensioenfonds Detailhandel said in its 2025 annual report released at the end of August that its asset management committee had initiated a new study in 2025 into possible measures to protect the coverage ratio during the lead-up to the transition.
The pension fund said: “In March 2026, the board decided to take additional protective measures by also hedging equity risk against major market drops,” adding that interest rate and currency risk had already largely been hedged.”
“The level of the coverage ratio at the time of switching to the new pension system is very important because it determines how many assets are available for the personal pension funds and the reserves and whether there is room for compensation,” the retail sector pension fund said in the report.
Over the course of 2025, the pension fund’s coverage ratio surged to 137.1% in December from 119.8% in January, according to its website. At the end of July 2026, the ratio stood at 143.9%.
A spokesperson for the retail pension fund told IPE’s sister publication Pensioen Pro that a put option had been bought which hedged 80% of the downside risk of the developed markets equity portfolio — a sub-portfolio which accounts for 84% of the pension fund’s total equity portfolio, according to Pensioen Pro, which reported the remaining 16% consisted of emerging market equities.
Based on this allocation, the put option protects just over 67% of the pension fund’s total portfolio against downside shocks, Pensioen Pro reported.
At the end of last year, Pensioenfonds Detailhandel’s total equity portfolio was valued at €10.9bn, out of total invested assets exceeding €39bn.
However, in its implementation plan for the pensions transition submitted last year, the retail pension fund had at that time said a protection mechanism was “not desirable”, according to the Pensioen Pro report.
The fund had cited the costs of setting up and maintaining the structure, as well as the complexity creating “additional governance challenges,” as reasons, as well as the fact that uncertainty about the precise transition date could have made the derivatives’ duration deviate from the intended term, Pensioen Pro reported.
