The Dutch pension fund for the construction industry, BpfBOUW, has increased its hedge on the dollar to mitigate any further falls in the currency.

The pension fund, which is planning to transition to the new Dutch pension system on 1 January 2026, said that as it moves towards this date, it has chosen to make investments less dependent on changes in the value of the dollar and interest rates.

BpfBOUW chairman, Eline Lundgren, said of the current volatile market: "It would have been very nice to be in a calmer period.”

She continued: “… we have looked at what the biggest risks are. We want the funding ratio to be maintained until we switch to the new rules,” she added, stating that the fund has “increased our hedge on the dollar”.

For BpfBOUW, the funding ratio at the end of 2025 will determine the situation for members and pensioners when the scheme transitions.

The scheme’s transition plan set out that the funding ratio at the time of the switch must be at least 105.4 per cent to ensure the switch can be made. If the scheme reaches a funding ratio of 113.8 per cent, then more will be possible.

Lundgren explained: "Pensioners then get a higher pension benefit immediately on transition. And it is also good for non-retired members. They will see their expected pension benefits go up."

Furthermore, she said the scheme was “keeping a close eye” on the development of interest rates. However, she does not expect the scheme to “abandon interest rate hedging for now”.

“We have reduced the risk of a further fall in interest rates. This gives our members and pensioners more security,” she said.

Under the new rules, the scheme will continue to invest collectively as it does now, but returns will be allocated differently. Going forward, the pension fund will take into account the ages of its members; for younger members, more risk can be taken, while less risk will be taken for older members.

BpfBOUW already surveys risk appetite once every five years to keep informed about its members' wishes regarding investments and will continue to do so.

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