‘Earlier prospect of a pension with purchasing power’ is a key objective of the Future Pensions Act. Inflation is therefore a core variable in the transition to the new pension contract. Protection against (risks in) inflation and its effect on interest rates is essential for confidence in the new pension system, in the longer term but also in the short term. Just now, however, inflation is proving more difficult to predict and more difficult for the ECB to manage.

This project looks at short-term inflation risk during the transition to the new pension system. The central question is what can we learn from the recent inflation shock and how we can prevent new shocks (positive or negative) from complicating the transition. A key question here is how inflation shocks affect interest rates and real development in the economy. Is there really a chance of stagflation (inflation with low unemployment), which DNB President Klaas Knot warned about? It is essential for confidence in the new system that pensions prove to be stable in value during and shortly after the transition. How can a pension fund anticipate these uncertainties and help hedge, for example, with their investment mix and cleverly chosen protection returns, without losing sight of longer-term interests?