The upcoming overhaul of the Netherlands’ private pensions system, the largest in the EU, is set to trigger a significant transformation in investment strategies for asset managers handling retirement savings worth 1.5 trillion euros. With a change from defined benefit to a new form of defined contribution models, asset allocation is expected to undergo a notable shift, potentially reducing exposure to euro zone government bonds in favour of riskier assets. The new system offers more flexibility, allowing pension funds to allocate risk differently across age groups. This shift could open opportunities for investments in corporate bonds, mortgages, and equities. However, concerns persist regarding uncertainties and the possibility of payout cuts under the new system. While proponents argue that the reforms create a fairer and more reflective system for an aging society, opponents worry about the potential for upheaval if pension payouts are reduced.
The success of the transition will depend on careful risk management and adaptability as market conditions evolve. Pension funds with robust operating models and a clear view of their portfolio performance and costs will find it less challenging to adapt to the changes.
PGGM Investments, Achmea Investment Management, APG Asset Management
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