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In an assessment of economic development and policy in the Netherlands, the IMF stressed that pension funds should manage their assets independently – and should not be incentivised to alter their asset allocation processes. In the past, the larger Dutch pension funds have been sceptical of the prospect of increasing investments in mortgages to shore up banks' balance sheets.
The schemes cited risk factors while warning that the allocation for investments would be limited in relation to the overall €650 billion of mortgage loans issued by banks. According to the IMF, the Dutch Cabinet must continue its efforts to reduce loan-to-value ratios and eliminate mortgage-interest deduction after the market has stabilised. It also argued that the Dutch government's top priority should be to ensure the resilience of the banking sector, given its exposure to falling property prices and heavy reliance on wholesale funding.
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