Analysis: Dutch pension fund reform spells investment rethink

[1/2] General view of the canals at the Prinsengracht in Amsterdam, Netherlands March 10, 2021. Picture taken March 10, 2021. REUTERS/Eva Plevier//File Photo
Summary EU’s top pension industry moving to defined contribution
New model allows for riskier investments – fund managers
ABN AMRO: 140 bln euros may leave top-rated euro zone bonds
AMSTERDAM, June 30 (Reuters) – An overhaul of the private pensions system in the Netherlands – the biggest in the European Union – is leading asset managers there to rethink how they invest 1.5 trillion euros ($1.64 trillion) of retirement savings.
Asset managers for top Dutch pension funds said the reform, which takes effect on Saturday, could spark outflows from euro zone government bonds in favour of riskier assets and change the way such funds protect themselves from swings in interest rates.
Changes approved in May mean funds which struggled to meet payouts during a decade when rates were negative will no longer promise benefits.
Instead, both future and – unprecedentedly – accrued pensions will move to a defined contribution model. Funds will divide their assets into pots for each individual and payouts will depend on contributions and market conditions.
Unlike defined contribution systems elsewhere, however, most funds are expected to choose a