Dutch Pension Shift Is About to Get Real for Worried Bond Market
One of the biggest owners of European government bonds could trigger a bout of volatility — just as many market participants are away from their desks.
The Binnenhof government complex in The Hague. An aging population and declining birth rates means its getting harder for the Netherlands to cover retirement costs.
Photographer: Lina Selg/BloombergIn the European market for long-term bonds, a once-loyal and deep pocketed customer is about to start shopping elsewhere.
The €1.6 trillion ($1.9 trillion) Dutch pension system — the largest in the region — is undergoing a major transformation aimed at making it more sustainable for an aging population. Funds will invest more in riskier assets and less in bonds, with a big drop in demand expected for long-term interest-rate hedges.