WILLEMSTAD, AMSTERDAM – The sharp decline in the value of the U.S. dollar is not only affecting Dutch pension funds but is also having financial implications for pension funds in Curaçao. This emerges from an editorial analysis of data from De Nederlandsche Bank (DNB) and the General Pension Fund of Curaçao (APC).
According to DNB, total investments by Dutch pension funds dropped by €54 billion in the first quarter of 2025. A significant portion of that loss—€24 billion—was due to the depreciation of the U.S. dollar against the euro. Dutch pension funds collectively manage over €1.7 trillion, with around €550 billion invested in U.S. dollars. As the dollar has significantly lost value since the beginning of this year, international investments have yielded much lower returns.
In the Caribbean part of the Kingdom, the effects of the falling dollar are also being felt. Although the Antillean guilder is pegged to the dollar, shielding it from direct exchange rate losses on U.S. investments, Curaçao’s APC is still facing setbacks. This is mainly due to its investments in currencies like the euro and British pound, which have appreciated against the dollar. As a result, when converted into guilders, the value of these investments declines.
Key points from the report include:
- APC manages nearly 6 billion guilders, with more than half of that invested abroad.
- Around 30% of those foreign investments are in international equities held in various currencies.
- Currency fluctuations, especially when the dollar weakens and other currencies strengthen, lead to indirect losses when assets are recalculated into guilders.
- These losses are reflected in APC’s financial statements and can put pressure on its funding ratio.
- APC has a reserve to buffer against market losses and applies a strategic investment policy that considers currency risk.
- However, with a current funding ratio of just under 108%, there is only limited room for pension indexation.
- Poor investment returns could quickly reduce that margin.
- While Dutch funds use financial instruments to hedge currency risks, it is unclear to what extent Curaçao’s funds apply similar protective measures.
- Curaçao’s pension system remains vulnerable to global market fluctuations, especially amid rising interest rates, currency instability, and geopolitical tensions.
As global economic uncertainty continues, the financial health of pension funds—both in the Netherlands and in Curaçao—will depend heavily on how well they manage foreign currency exposure and adapt to volatile markets.
Source: Curacao Chronicle https://www.curacaochronicle.com/post/main/falling-us-dollar-impacts-pension-funds-in-curacao-and-the-netherlands/
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