THE HAGUE — Countries with advanced pension systems are broadening where they invest, guided by the principles of long-term returns for members and diversification. They are looking beyond listed stocks and bonds to unlisted companies and infrastructure, while allocating capital based on profitability and risk.
The approach stands in contrast to South Korea's retirement pension system, where the weight sits heavily on principal-guaranteed products. Major pension funds surveyed by the Dutch central bank, De Nederlandsche Bank (DNB), held 229 billion euros in unlisted assets in 2025, or 23% of their total portfolios, the DNB said on the 10th. The figure excludes real estate and mortgage loans.
Ger Jaarsma, chairman of the Federation of the Dutch Pension Funds, said pension capital can contribute to housing, infrastructure, innovation and the energy transition, but only if it upholds members' interests and the principles of risk-adjusted returns and diversification. He suggested the government ease investment risk through guarantees and co-investment.
There is also evidence that pension capital can help improve corporate productivity. Roel Beetsma, dean of the Amsterdam School of Economics and Business at the University of Amsterdam, said unlisted companies in Denmark in which pension funds took equity stakes showed productivity 3% to 5% higher than comparable firms. The finding came from comparing companies with similar productivity trends before the investment.
Beetsma said pension funds should not be forced to invest domestically, adding that institutional investors need help pooling capital and expertise to identify promising companies. Britain and Japan are also focusing on making their companies more attractive to investors, as a way of channeling long-term pension money into domestic growth. Imran Razvi, senior policy adviser at the U.K.
Investment Association (IA), said the group is actively exploring ways to direct money from workplace pensions and Individual Savings Accounts (ISAs) into domestic infrastructure and growth companies, but that the most important starting point is always investor interests and long-term returns.
Under the principle of global diversification, he said, long-term capital flows in naturally when domestic assets offer commensurate returns and competitiveness. Japan, for its part, is concentrating policy efforts on improving the profitability and corporate value of listed companies so that money from the new NISA program flows in balanced fashion into both domestic and overseas equities.
That carries significant implications for South Korea, where about 75% of the 501 trillion won ($340 billion) in retirement pension assets is locked up in principal-guaranteed products. Analysts say long-term returns must be raised by having professional asset managers provide portfolios spanning public and private assets, rather than leaving the decisions to individual investors.
The government, they add, should share investment risk with the private sector and strengthen corporate competitiveness to create an environment in which pension money flows naturally into productive areas such as housing, infrastructure and innovative companies.
