Netherlands plans to open workplace pensions market to foreign EU providers

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Netherlands opens pensions market

Highlights

Netherlands plans to remove the Dutch foundation requirement for mandatory industry-wide pension schemes, allowing other EU providers to enter a €1.97 trillion market.
Local funds ABP and PFZW, managing €530 billion and €250 billion respectively, may face increased competition as mandatory occupational pensions are opened to foreign competitors.
ABP and PFZW report 15-year inflation-adjusted returns of 2.9 percent and 2.2 percent, below the 4.6 percent median, as the Dutch pension system shifts to defined-contribution plans from 2024.

Planned rule change for mandatory pensions

As reported by Financial Times, Social Affairs and Employment Minister Hans Vijlbrief has agreed to work with the EU on changing rules that currently require mandatory industry-wide pension schemes to be run by a Dutch foundation, excluding commercial overseas providers from this part of the market.

In a letter to the Dutch parliament in May, seen by the FT, Vijlbrief says a bill will be prepared so that the foundation requirement will no longer apply to pension institutions from other EU member states seeking to operate in the market. The Dutch social affairs ministry says it will address and resolve the issue in the period ahead.

The move follows claims from campaigners that the current arrangement breaches an EU directive on cross-border services within member states. The Netherlands has the largest pension system in the European Economic Area, according to the European Central Bank, with total pension assets of about 1.97 trillion euros at the end of March, according to the Dutch central bank.

Competition pressure and sector implications

The restriction affects the mandatory occupational pensions system, the core of the Dutch workplace retirement model, which sits alongside the state pension and private pensions. Local providers dominate this segment, with ABP and PFZW together controlling nearly half the market, managing about 530 billion euros and 250 billion euros respectively.

Hans van Meerten, professor of European and international pension law at Utrecht University, says he believes the current structure is aimed at protecting a Dutch pensions monopoly. Jacintha van Bijnen-den Haag, strategic pension adviser at Aon, describes the system as closely intertwined with union influence, while consultant Sander Deelstra of Howden says greater competition should benefit employers, employees and savers.

Performance concerns also add to the debate. According to data from the Finnish Centre for Pensions, ABP and PFZW rank among the three weakest performers for inflation-adjusted returns over the past 15 years in a comparison of 24 global public plans, with ABP returning 2.9 per cent and PFZW 2.2 per cent to the end of 2025, versus a median 4.6 per cent. Both funds acknowledge weak returns and say conservative investing and interest-rate hedging have weighed on performance.

The policy shift comes as the Dutch pension system undergoes a broader overhaul from this year to improve sustainability as the population ages. Funds have begun moving from a defined-benefit model to a defined-contribution system, where retirement income can fluctuate with fund performance.

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