In-Depth Analysis of the Impact of Dutch Pension Reform on the Eurozone Credit Market and Investor Allocation Strategies

The Netherlands has the world’s second-largest pension market, with total pension assets exceeding

(as of Q3 2025), equivalent to more than the country’s annual GDP[1]. This massive capital pool makes it a key institutional investor in the Eurozone and global capital markets. The Dutch pension system has long been dominated by , with approximately 74% of pension assets operated under the DB model, where investment risks are borne collectively[2].

The Dutch pension reform launched its legislative process in July 2023, originally scheduled for phased implementation but has undergone multiple adjustments[3]:

Time Node	Key Event
July 2023	Legislation passed, reform framework launched
2024	Implementation plan delayed, details adjusted
2025	Transfer plan suspended for review
2026	Enter full transition period
January 2028	Old pension system officially expires

The core of the reform is the

. Under the new system, financial market shocks will , shifting investment risk from collective bearing to more direct individual bearing[4]. This transformation will fundamentally change the asset allocation logic and risk management strategies of Dutch pension funds.

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The Dutch pension reform will significantly alter the supply and demand dynamics of the Eurozone government bond market. Analysts at Societe Generale predict that during the entire transition period, the market will see a long-end pay-fixed position with a DV01 size of approximately

[5]. This large-scale capital flow will drive:

• 2026
  : The 10-30-year yield curve will steepen to
  over 40 basis points
• 2027
  : The steepening amplitude will reach nearly
  75 basis points

This steepening amplitude far exceeds the historical average (approximately 50 basis points), marking a profound change in the pricing logic of the Eurozone bond market[5].

Research from Danske Bank reveals a key trend overlooked by the market:

[6]. Previously, 30-year bonds were the traditional segment for ultra-long-term bond issuance, but as the Dutch pension reform shifts focus to 15-20-year tenors, the Eurozone government bond market is adapting to this new framework.

This transformation means:

• 15-20-year government bonds
  : Demand rigidity increases, prices receive support, and volatility may decrease
• 30-year government bonds
  : Downgraded from “core assets” to “volatile assets”, with declining liquidity
• In the Euro interest rate swap curve, the
  20-year swap rate
  will become a more important pricing benchmark[6]

The impact of Dutch pension reform on the Eurozone credit market will be transmitted through the following channels:

In Dutch pension asset allocation, government bond holdings amount to approximately

, and credit bond holdings total approximately [7]. As the reform progresses, institutional investors will rebalance their duration exposure, which is expected to lead to:

• Increased demand for long-end government bonds from core countries (Germany, the Netherlands)
• Long-end government bonds from peripheral countries (e.g., Italy) face selling pressure
• Widening divergence in spreads between sovereign bonds and investment-grade credit bonds

The structural steepening of the yield curve will affect:

• Risk pricing models for fixed-income products
• Arbitrage opportunities for interest rate derivatives (swaps, futures)
• Duration matching strategies in bank asset-liability management

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The large scale of Dutch pension assets means their allocation adjustments will have a profound impact on the global fixed-income market. Data shows the asset allocation structure of Dutch pension funds is as follows[7]:

Asset Class	Scale (EUR)	Proportion
Government Bonds	€336 billion	~35%
Credit Bonds	€226.3 billion	~24%
Equity Investments	€213 billion	~22%
Investment Funds	€169 billion	~18%
Other Investments	€95.6 billion	~10%

During the transition from DB to CDC, pension funds will face the following adjustment pressures:

1. Reduce exposure to ultra-long-end (over 25-year) government bonds
2. Increase the proportion of medium-term (15-20-year) bond allocations
3. Potentially increase the proportion of equity and alternative investments
   to enhance returns
4. Adjust hedging strategies
   to adapt to new risk exposures[7]

As pension reform progresses, European insurance companies are also making strategic responses. In 2025, Dutch insurance companies have taken on approximately

in pension buyout transactions, raising their share of Dutch pension liabilities to (total €230 billion)[8]. Insurance companies prefer to allocate to high-quality assets such as , which will further alter capital flows in the Eurozone credit market.

Structural changes create opportunities for active investors to earn excess returns:

• Curve steepening trades
  : Go long on 15-20-year government bond futures while shorting 30-year contracts
• Spread trades
  : Conduct relative value trades between sovereign bonds of core and peripheral countries
• Duration matching strategies
  : Develop customized products for institutional clients

State Street Global, in its 2026 Global Market Outlook, pointed out that the capital allocation changes caused by Dutch pension reform provide

[9].

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Risk Category	Details	Impact Level
Liquidity Risk	Declining liquidity of 30-year government bonds, widening bid-ask spreads	★★★★☆
Repricing Risk	Ultra-long-end assets face value revaluation	★★★★☆
Maturity Mismatch	Worsening mismatch between liability duration and asset duration	★★★☆☆
Market Volatility	Short-term volatility caused by structural adjustments	★★★☆☆

1. Increase holdings of 15-20-year government bonds from core countries
   • 15-20-year government bonds from Germany, the Netherlands, and France will receive structural buying support
   • Relevant ETFs (such as products tracking Eurozone government bonds with maturities over 15 years) may see capital inflows[6]

2. Focus on curve steepening gains
   • Use interest rate swaps or futures to build curve steepening positions
   • Relative value trades between 20-year and 30-year government bonds

1. Reassess duration allocation
   • Adjust the definition of “long-end” from 30-year to 15-20-year
   • Adjust the benchmark duration of bond portfolios

2. Focus on structured products
   • Mortgage-Backed Securities (MBS)
   • Asset-Backed Securities (ABS)
   • Private credit products

1. Increased importance of currency hedging
   • Unhedged Eurozone investors need to pay attention to exchange rate volatility risks[9]
   • Priority should be given to currency hedging for USD- and JPY-denominated bonds

2. Volatility management
   • Monitor changes in the VIX and interest rate volatility indices
   • Appropriately allocate option strategies to hedge tail risks

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Time	Expected Event	Market Impact
H1 2026	Transition period begins, capital adjustment accelerates	10s30s curve steepens to over 40 basis points
H2 2026	Treasuries of various countries adjust bond issuance plans	Supply of 15-20-year bonds increases
2027	Structural adjustments are basically completed	Curve steepening reaches a peak of 75 basis points
2028	Old system officially expires	New equilibrium is formed

Dutch pension reform is a

, and its impact will extend far beyond the Netherlands, exerting a profound influence on the entire Eurozone and even the global fixed-income market. The main conclusions are as follows:

1. Structural changes rather than cyclical fluctuations
   : The steepening of the yield curve is driven by structural capital flows, not short-term market sentiment
2. The definition of “long-end” is being reshaped
   : 15-20-year bonds are replacing 30-year bonds as the new long-end investment benchmark
3. Widening credit spread divergence
   : Spreads between core and peripheral countries, and between long-duration and medium-duration bonds, will continue to expand
4. Opportunities for active management
   : Structural changes create opportunities for active investors to earn excess returns
5. Risk management needs reassessment
   : Institutional investors need to adjust their duration matching strategies and risk pricing models

For global investors, this transformation is both a challenge and an opportunity. In-depth understanding of the impact mechanism of Dutch pension reform will help seize the initiative and optimize allocations amid the structural reshaping of the Eurozone credit market.

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[1] Sina Finance - Analysis of Dutch Pension System Reform (https://cj.sina.cn/articles/view/7857201856/1d45362c001901gzrk)

[2] Sina Finance - Evolution of Dutch Pension Asset Structure (https://finance.sina.com.cn/roll/2025-11-05/doc-ifqqqrya3456789.shtml)

[3] House of Representatives of the Netherlands - 2026 Outlook Report (https://www.tweedekamer.nl/downloads/document?id=2025D51985)

[4] NORD/LB - Covered Bond & SSA View Research Report (https://www.nordlb.com/my-nord/lb-portals/download/research-document-13822)

[5] Gelonghui - Societe Generale’s Forecast on the Impact of Dutch Pension Reform (https://cj.sina.cn/articles/view/7857201856/1d45362c001901gzrk)

[6] Sina Finance - Danske Bank’s Analysis of 15-20-Year Bonds (https://shishixinwen.news/news/sina/live/4593246)

[7] De Nederlandsche Bank - Dutch Pension Asset Allocation Data (https://www.dnb.nl)

[8] European Pensions - Dutch Insurers’ Pension Buyouts (https://www.europepensions.net/ep/Dutch-insurers-take-on-7bn-in-pension-buyouts)

[9] State Street Global - 2026 Global Market Outlook (https://zhuanlan.zhihu.com/p/1985354706466394538)