Dutch pension funds brace for hedging revamp

Planned legislative changes set to reduce long-end hedging needs, but market divided on curve impact

After nearly a decade of tortuous and sometimes bitter debate, the Netherlands is close to reforming its much-vaunted pensions system.

A new law passed by the lower house of the Dutch parliament last December will move the country’s occupational pensions from a defined benefit model to defined contributions by 2027 – fundamentally altering pension funds’ hedging strategies in the process.

Without guaranteed payouts, Dutch pension funds no longer need to hedge interest rate risk to the same

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