Dutch pension funds have expressed support for the development of a National Investment Institution (NII), but warned that investment decisions must be driven by viable opportunities and members’ interests rather than predetermined allocation targets.

The NII is intended to combine public and private investment capacity and accelerate investment in areas considered important to the Dutch economy.

Dutch Pension Federation chair, Ger Jaarsma, said pension funds were keen to help develop the initiative and move quickly towards creating concrete, investable propositions.

“The NII can combine public and private investment power and thereby accelerate investments that make the Netherlands stronger," he continued.

“Pension funds are therefore eager to contribute to the further elaboration and quickly take the step towards concrete, investable propositions.”

However, Jaarsma warned against setting a fixed amount that pension funds would be expected to invest through the institution.

He argued that allocations should follow the availability of appropriate opportunities rather than political targets.

“We are often asked how much extra money we can and want to invest. However, amounts follow from investable propositions, and not the other way around,” he said.

“A predetermined amount would send the wrong signal. Then political policy becomes the guiding principle, whereas the pension interest must remain the guiding principle.

“Pension funds are eager to contribute, but never at the expense of their primary mission: ensuring a good pension.”

Potential areas for investment through the NII include digitalisation and artificial intelligence, security and resilience, energy and climate technology, and life sciences and biotechnology.

However, the federation stressed that pension funds would only invest in projects that were financially responsible when assessed against expected returns, risks, and environmental, social, and governance factors.

It stated that the Dutch government would need to help create a sufficient pipeline of suitable projects by providing stable, long-term policy and reducing risks that institutional investors could not bear on their own.

“If the government wants institutional investors to do more, it must also ensure the right preconditions,” Jaarsma added.

“That means clarity, continuity and, where necessary, removing risks that pension funds and other institutional investors cannot bear alone.”

The federation also emphasised that every pension fund would independently assess whether an individual proposal fitted its investment policy and responsibilities towards members.

Funds would need to be able to explain to members and pensioners where their assets were invested and how each allocation supported their wider investment strategy.

“With professional governance, clear selection criteria and an appropriate risk-return ratio, the NII can better align pension assets and societal challenges,” Jaarsma concluded.

---