Implications of the Wtp in asset management

By Luis Hernandez, Quantitative consultant, June 2024

The deadline for the transition plan for pensions under the Wtp is approaching, bringing with it numerous challenges, risks, and uncertainties. Given the complexity of the implementation, it’s prudent to consider several key questions. Should we commence the transition now? Should we de-risk before diving in? Are there minor issues that could escalate post-transition?

Given the size of the Dutch pension system – approximately € 1.6 trillion in assets by 2023 – a major restructuring is likely to have significant impact on financial markets. The impact will vary depending on several factors, including the scale of the transition and the investment behaviors of new defined contribution (DC) participants. This is the key aspect of the reform changing from a defined benefit (DB) to a DC system, which seeks to provide more individualized pension options, allowing people to tailor their pensions to their own career paths and life situations. Switching from one large pension fund to multiple individual funds has several implications.