Friday 03 February 2023

Aegon launches first universal pension fund

Pensioners on a bench

Pensions may have to be cut next year. Photo:

Insurer Aegon is to launch the first universal pension fund in the Netherlands, following a change in the rules to allow different sectors to pool their resources.

The Dutch national bank DNB has approved the scheme, which is aimed at smaller pension providers who are struggling with high costs and tighter regulation. Until now pension funds have been limited to single companies or specific sectors of the economy, such as the giant civil service fund ABP.

The fund, named Stap, will be operated by Aegon and subsidiary company TKP. It will have an initial capitalisation of €500,000 and 20,000 members. Aegon did not disclose which pension providers had joined the scheme.

The Dutch pension system has won acclaim around the world, but there has been growing pressure to reform it in recent years as providers have seen their assets shrink in a climate of historically low interest rates.

By law a pension fund must have a coverage ratio of 105%, meaning its assets outweigh its obligations by 5%. Several large pension providers, including ABP, have seen the level drop to around 90% in the last few years. If the proportion does not improve they will be forced to cut pension payments next year.

The working generation are also losing faith in the pension system as career patterns change, with an increase in casual labour, job hopping and self-employment. Last month the government’s senior advisory body SER called for the introduction of personal pensions with collective risk-spreading to replace the current system of supplementary pensions.

Other insurers are expected to bring forward their own universal pension funds in the near future. The universal funds can contain several different pension plans, each with their own application procedures and financial coverage requirements.

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