Money managers could capitalize on the proposed Dutch pension legislation that is expected to move all pension fund assets and liabilities to defined contribution plans by 2020, industry sources said.
The newly elected Dutch government, in a paper published Oct. 10, laid out reforms that would move pension assets to personal accounts from legacy defined benefit arrangements. That effort is aimed at making the €1.1 trillion market less fragmented as it is now among defined benefit, defined contribution and hybrid plans.
Remaining key questions, including how existing defined benefit liabilities would be addressed, are expected to be negotiated with social partners — pension funds, corporations and unions — early next year, the paper said.
The new structure, if enacted, has the potential to change the investment patterns of Dutch investors by encouraging greater exposure to more risky investments, sources said. In turn, that could produce more opportunities for money managers.
According to Mercer's 2016 European asset allocation survey, Dutch plans had 29% of assets in equity, 57% in bonds, 4% in real estate and 10% in other asset classes.
Some industry sources added that equity managers could end up winning more business because the incoming changes will introduce lifecycle funds, which automatically adjust risk tolerance during a participant's life, on a larger scale.
Rene van de Kieft, CEO of money manager MN in The Hague, Netherlands, said in a telephone interview that retirement plans will move to a lifecycle fund construct, depending on the final outcomes of the pension reform.
"Instead of choosing traditional allocation for the whole defined benefit fund, they will have the possibility to use investment funds for individual accounts," he said.
Gerard Riemen, director at Pensioenfederatie, the Dutch pension funds federation in The Hague, in a separate interview, added: "An individual account gives people a choice of investment policy."
Maureen Schlejen, head of institutional relations, Netherlands, at NN Investment Partners in The Hague, said in a separate interview that a move to lifecycle funds will enable plan participants to remain invested in equity for longer. And retirement plans currently offering a mix of DB and DC could also benefit. "Plans will move assets out of defaults into tailored solutions," Ms. Schlejen said.