The Dutch pension fund for the construction industry, BpfBOUW, has reported a negative return on investments in the fourth quarter (Q4) of 2025, due to uncertainty in the financial markets and the increased interest rates.

Despite this, the fund saw its current funding ratio, the ratio between its assets and liabilities, increase by 4.2 percentage points to 141 per cent in Q4, which it credited to increased interest rates.

In addition to this, BpfBOUW reported that its policy funding ratio, the average of the funding ratios over the past 12 months, rose by 3.7 percentage points to 133.1 per cent over October, November and December.

BpfBOUW said 2025 was a year of geopolitical shocks and policy uncertainty, but its funding ratio increased due to a favourable combination of higher interest rates and higher stocks on the global equity markets.

According to the fund’s results, its pension assets saw a decrease in assets of €0.86bn in Q4, resulting in its assets standing at €66.43bn at the end of December 2025, which it credited to a negative total return on its investments.

Meanwhile, it also saw a decrease in pension liabilities of €2.09bn in Q4, resulting in its liabilities totalling €47.11bn at the end of December, which the fund primarily attributed to the rise in interest rates.

But, as BpfBOUW assets decreased less sharply than the value of its liabilities, the funding ratio increased, and the financial position of its fund improved further.

“At the end of the year, financial markets adopted a cautious stance. This was the result of mixed global macroeconomic signals, relatively high valuations related to the expected effects of artificial intelligence (AI), and continued uncertainty about the Federal Reserve's interest rate policy,” the fund explained.

“The negative return during Q4 was mainly driven by negative return contributions from interest rate swaps within the overlay and the negative return on fixed-income securities. This was the result of rising market interest rates during that period. Equities recorded a positive return, mainly due to the strong performance of emerging markets.”

The fund also reported that its total real estate portfolio achieved a positive total return in Q4, with the Dutch sector funds and the international real estate portfolios both showing positive total returns.

The fund explained that as it transitioned to the new Dutch pension system at the start of this year, Q4 of 2025 was the last quarter that it would use the funding ratio as an indicator of its financial health. 

The board said it is “pleased” that the transition to the new rules for pensions as of 1 January 2026 has gone well so far.

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