nuOct 28, 2026, 23:00

Pension funds benefit from higher interest rates ahead of new system

Dutch pension funds ABP and PME reported improved coverage ratios in the third quarter as rising interest rates reduced their pension liabilities faster than their assets. The funds are now preparing for a transition to a new national pension system on January 1, which will replace collective pots with individual investment-based accounts.

Dutch pension funds ABP and PME experienced a volatile third quarter marked by rising interest rates and geopolitical uncertainty. Despite a decrease in overall assets due to investment challenges, the rising interest rates led to a more significant reduction in pension liabilities. Consequently, both funds saw their coverage ratios improve, with ABP reaching 132.2 percent and PME rising to 132.8 percent. This increase suggests that these major funds hold a larger amount of capital relative to their future obligations before transitioning to a new pension system.

As of January 1, these funds will shift from the traditional collective pot model to individual pension accounts. This transition aims to modernize the system, shifting focus from coverage ratios to investment performance-based growth. PME has indicated that, provided market conditions remain stable, participants could see pension increases of over 12 percent by 2027. Under the new rules, investment strategies will be tailored to the age of the participant, allowing for more risk in younger portfolios to maximize long-term outcomes while maintaining a conservative approach for older members.

Economy Business Netherlands

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Based on reporting by nu. Translated and condensed by LocalHeadlines.

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