The power of pension assets in the economy – a Dutch perspective

This piece in the FT caught our eye last weekend, as the theme of potentially unlocking pension assets to support wider economic objectives is so topical. It links to the current discussions over use of both public sector and private sector pensions assets in the UK.

This is connected to radical reform in the Netherlands of occupational pensions from defined benefit (a promised pension) style to defined contribution (no promise) - food for thought for policy developers! Whilst such radical reform is not on the agenda here at this point, the drive to move pension assets away from low risk and to make use of illiquidity premiums is highly relevant to current conversations about consolidation for scale and how surpluses might be grown and used.

This is interesting, too, in the context of the development of the Private Intermittent Securities and Capital Exchange System (PISCES) in the UK. Corporate and M&A partner at Burges Salmon, AJ Venter, comments, “PISCES has the potential to address a number of challenges in relation to pension assets – including facilitating structured diversification of investment portfolios to include private capital assets and providing an appropriate regulatory framework to allow for ‘investing with confidence’ in private capital assets.  We anticipate that the launch and implementation of PISCES will be closely followed by the pension investment community as the desire to tap into the full firepower of pension assets shows no sign of abating”.

We will continue to monitor developments with interest.

Dutch pensions to invest €100bn in risky assets boosting Europe’s defence efforts

https://www.ft.com/content/9aa53288-d650-44dc-8ba0-88d5641720eb