Five Dutch pension funds estimate they will switch to the new defined contribution (DC) pension system only by 2028, according to a survey by pension regulator DNB. The moves reflect a wider trend of schemes postponing their transition to the new DC arrangement.

The five funds are anticipating the transition deadline to be pushed forward, which pensions minister Carola Schouten promised to do earlier this year. However, the bill that should arrange this is yet to be sent to parliament.

One of the funds that plans to move to DC by 2028 is Pensioenfonds Nederlandse Groothandel, the sector fund for wholesalers. DNB did not mention individual funds in its survey.

Postponement trend

The DNB survey confirmed a wider trend of pension funds postponing their transition date. The number of funds arranging a move to DC by early 2027 doubled to 35, while the number of funds planning to make the transition by 1 July 2027 rose from one to nine.

This is offset by a drop in the number of funds that plan to move to DC in 2026 or 2025.

The centre of gravity of the transition is in 2026, with 74 funds planning to make the transition then. DNB sees a risk that a concentration of funds in 2026 could lead to capacity problems for pension administrators, advisers, actuaries, accountants, IT firms, lawyers or for regulators DNB and AFM.

“It is good that funds are anticipating this,” DNB said.

The survey also found that 35 funds expect to close in the next five years with another 20 still considering that option.

It is also notable that social partners for all funds have now made a provisional choice for either the flexible arrangement or the solidarity arrangement, with more collective features. Seven in 10 funds will go for the latter, with just 28% opting for the flexible contract with individual lifecycles. Additonally, 2% of funds will offer both types of arrangements.

Funding ratio protection

Furthermore, half of pension funds intend to temporarily reduce investment risk to protect their funding ratios in the run-up to the DC transition.

Most funds will stay within the bandwidths of their strategic asset allocation, but more than 20 want to be able to temporarily deviate from this position. DNB had already indicated that the funds in question should change their strategic investment policy for this to be allowed.

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

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