/SWAPS: ING: Timing The Market Impact Of The Dutch Pension Transition Will Be Difficult

ING note that “the next big Dutch pension reform is coming, moving most of the system towards a Defined Contributions model over a period of 3 years.”

• “We foresee large flows of fixed rate paying in long swap dates, from 30yr out to 60yrs, as prior fixed rate receivers are unwound.”
• “Steepening pressure along the 20-30yr swap segment is expected as 10-20yr receivers remain in place.”
• “Timing these flows will be difficult. Most pension funds expect to transition in 2026, but the regulator has a deadline of 2028 and delays are already anticipated.”
• “Some funds have recently commented that they prefer to wait for other pension funds to reform rather than being the “early bird”.”
• “On top of that, the political parties currently in Dutch coalition talks have expressed concerns about the new pension system, leaving a small chance that the present implementation of the legal framework will be challenged again.”