NETHERLANDS - The Dutch central bank and pension fund regulator De Nederlandse Bank (DNB) has revealed Dutch pension funds' active capital has dropped by 20% to €600bn in less than three months.

This latest figure stands in contrast to the €751bn of total pension fund assets which Dutch pension funds still had at the end of the second quarter this year, according to a DNB's quarterly report published last month.

The central bank published a statement on its website earlier today following reports in the Dutch media suggesting the DNB would pressure pension funds into a so-called 'fire sale' - selling stocks at the lowest point of the market- and calling on the regulator to relax the rules that apply when a fund's solvency ratio drops below 105%.

The DNB had denied such claims and pension funds are "under no circumstance" forced to adjust their investment policy, even when the fund has reached an unfavourable financial position and has handed in a three-year recovery plan, according to a spokesman.

According to the DNB, the Dutch system is still robust but stated: "The total available pension capital is currently an estimated €600bn, opposite yearly-paid benefits of around €20bn," the statement read.

The regulator added the current pension law gives enough flexibility to honour the long-term character of the pension liabilities. "That space can now be used," added the DNB.

In the statement, the regulator urged pension funds not to make any hasty decisions regarding contribution rates and indexation, but to first do an in-depth analysis and make a decision by the end of this year.

DNB revealed last month the sum of money held in equity investments rose by €13bn to €375bn in the second quarter, while the fixed income allocation decreased by €2bn to €252bn. (See earlier IPE story: ‘Dutch schemes pulled back a fraction in turbulence')

Gerald Santing, former director of The Netherlands' Authority of the Financial Markets (AFM) - the second Dutch pension regulator - commented today: "By rebalancing their asset mix, the pension funds invested a massive amount of money in stocks in the second quarter, which brought their sensitivity to changes in the stock markets back to the level of the beginning of this year."

He warned pension funds should not blindly rebalance their asset mix while ignoring their tactical asset allocation.

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