Retirement Investment Optimisation – My New Portfolio

A while ago I posted about the Dutch retirement system, and how you can save money for retirement in three different pillars.

This is an article about optimising my pillar two savings, the employer’s retirement account.

Default Retirement Funds

My employer and I put money into a pre-tax retirement account. The retirement company then invests it until my official retirement age. At that age, I can use the money to purchase a monthly payment for the rest of my life.

The retirement account invests your money according to two choices. The first decision is to let the management company invest your money, or to invest in an allocation of your choice. The second decision is either how much risk you want to take (when they invest for you), or which funds to invest in (when you invest).

If you don’t make a decision, the default is the management company investing the money for you in a neutral risk profile.

The funds they invest in with the neutral profile are:

  • NN First Class Return Fund I – N
  • NN Liability Matching Fund (M)
  • NN Liability Matching Fund (XL)

The first thing I did was switching to the offensive profile, where they invest in just one fund for you:

  • NN First Class Return Fund I – N

The problem with this fund is that even though at first sight the TER or total expense ratio is not that high (0.40%) they invest in a random set of other funds. To me it seems there’s no logic behind this.

The NN fund invests in 48 other funds and shares. See the top 10 positions below.

Asset Name% of Total Assets
NN (L) Global Sustainable Eq Zz Cap EUR17.44
NN (L) Emerg Mkts Hi Div Zz Cap EUR10.77
NN (L) Global Real Estate Zz Cap EUR7.62
NN (L) Commodity Enhanced Zz Cap EUR H i6.35
NN (L) Alternative Beta Zz Cap EUR H i6.24
NN (L) EmMkts Dbt (LclBd) Zz Cap EUR5.30
NN (L) Global Hi Yld Zz Dis EUR H iii4.36
NN Euro Credit Z3.74
NN (L) Em Mkts Dbt Hrd Ccy Zz Cap EURH i3.49
Microsoft Corp1.74

This top 10 makes up 67% of the total assets of the fund.


A few things come to my mind. First of all, I immediately see that most of the assets are in other NN funds. If you look them up, they’ll look super cheap with TERs of 0.01%. That seems super cheap, but I suspect there are a lot of hidden costs involved.

I do think that most of these funds are actively managed, which would imply transaction costs and a lower return, since most active managers cannot outperform index funds.


The diversification within the fund seems very odd to me. Maybe I have the luck of managing a very small portfolio, where the NN fund managers are managing almost 30 billion euros in this fund. There definitely is a drag when managing multi billion euro portfolios, however, that doesn’t mean that the managers should invest in all kinds of crazy funds. Why couldn’t they just invest in broad market index funds?

In this fund, I see that they invest in both sub funds (equities, debt, commodities), and individual securities.

The Microsoft stock is even in the top 10, with 1.74% of assets invested in this one share! On top of that, the largest sub fund (sustainable equities) contains Microsoft stock. Within that fund, that makes up 17% of the main fund, Microsoft is the largest investment (4.9%)! That means that weighted, Microsoft makes up not just 1.74% of the NN fund, but 2.59% (0.85% comes from the 4.9% of 17.44%).

Now within a diversified portfolio, say the index tracking ETF VWRL Microsoft makes up 1.85% and the largest share is Apple at 2.42%. These percentages aren’t that rare, but I just think it’s odd to have an asset allocation like this. It seems that it is not designed with my best interests in mind, but with those of NN. Of coure, this makes sense. I do understand that NN has to make money. I’m just worried that so much people participate in these schemes through their retirement accounts without knowing what’s going on.

That’s the reason I’ve been digging deeper, and figured out I can invest in individual funds myself.

My New Retirement Fund

When you log in to your retirement account, you can change the way your money is invested. Either you can change the asset allocation, or choose to invest yourself. When I chose the latter option, I got presented a list of funds to invest in.

Retirement account funds list 1
Retirement account funds list 2

As you can see, even when you choose for your own asset allocation they are pushing the expensive NN funds really hard. Can’t blame them for trying to make money…

On the second page (the shorter list), third option from the bottom, we see the only viable index tracking product.

Index Funds

This iShares fund is an index fund that tracks the world wide developed markets equities and invests in approximately 1,600 securities for a TER of 0.17%. Yea baby, that’s what I’m talking about!

Obviously, this seems to be the candidate for my retirement portfolio. Next to it, I would like to have a fund that invests in emerging market equities.

I’m not interested in bonds, as I’m currently 25 and the earliest I can liquidate this retirement account at approximately 71 years old… Perhaps there are possibilities to get to this money earlier but 71 years is my official expected retirement age.

Luckily, these retirement investments don’t count against my wealth tax.

Emerging Markets

Back to emerging market equities. In this list I see a couple funds that claim to invest in EM shares. The problem is that they are all either very expensive (close to a 1% TER), very narrow (only a couple dozen of securities, or both).

Both reasons are good enough for me to not invest in these funds. Above all, I should have the possibility to diversify my portfolio in a cheap way. That would’ve made my retirement account a lot more diversified, because do expect emerging markets to show a lot of growth in the next few decades.


In conclusion I moved my entire pre-tax retirement account from the standard NN fund to the super cheap index tracker from iShares. That means that 100% of my pre-tax money is now in equities, in slightly more than 1,600 securities from the developed world.

As soon as NN offers a proper EM tracker, I will invest 15-20% into that one, and keep the remainder in the iShares developed world product.

When I get older, I might consider adding bonds to the portfolio too. For now though, looking at the ultra long lock up period, I will go with 100% equities.

My post-tax strategy will not change soon. I’ll continue to put money away with 50% in equities and 50% in cash to eventually buy an investment property.

How does your retirement account look like? 

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10 thoughts on “Retirement Investment Optimisation – My New Portfolio”

  1. Recognizable. Zwitserleven also has this strategy of putting you in tens of different small active mutual funds of theirs when you have a retirement investing account with them. It sucks.

    Good for you, looking at it and making a better choice!

  2. I’m also building up my pension throughout my employer with Nationale Nederlanden after they merged with Delta Lloyd.

    I’ve already in the beginning changed the profile to Offensive instead of Neutral within the “lifecycle method”, but I can’t find the option for your fund of choosing?
    Where can I find this option in the online portal? Or perhaps I can’t change it because my company has chosen for the “lifecycle method”?

    • I have the same issue with the retirement account from my previous employer. That one was also from Delta Lloyd and is now NN after the merger. I cannot change that one unfortunately. I’m still wondering whether I should try to move the funds to my actual retirement account. It is said this isn’t worth it usually, but I’m wondering how much more return I could make if I did.

  3. I’ve checked it with NN and got the following reaction:

    “Uw werkgever heeft inderdaad voor de Groep Passieve Lifecycle gekozen, maar wel met ruime vrijheid. Dat houdt in, dat u ook de keuze hebt om zelf te beleggen.

    Fondskeuze wijziging
    Als u uw fondskeuze wilt wijzigen naar Zelf Beleggen hebben wij het fondskeuzeformulier van u nodig, deze bestaat uit de “Profielbepaler” en het “Fondskeuze formulier”. U vindt de formulieren via de volgende link:

    Twee soorten fondskeuzeformulieren
    Er zijn twee fondskeuzeformulieren beschikbaar voor uw persoonlijke pensioenplan: ‘Passief, Dynamisch en Ambitieus’ en ‘Index en Profiel Mixfonds’. U kunt aan de hand van uw pensioendocumenten zichtbaar in MijnNN bepalen welk formulier u nodig hebt voor uw pensioenverzekering.”

    So it is possible for me. I’ve taken already a quick look into it, but I didn’t see the Ishares option you mentioned. It also could have something to do with the merger between DL and NN, because I have an option “Delta Lloyd Fondsen Particulier”.

    After that under “Erasmus aandelenfondsen” I see the
    (ISIN IE00B4L5Y983)

    I’ll try to have a better look into it this weekend and I’ll keep you posted.

    • It seems then that your retirement account is different from mine. It looks like my current employer has the same contract you describe above. In my article you can read how I can invest in equity index funds instead of the NN Mix Funds.
      With my old employer’s retirement account I cannot change this. It literally says “er is gekozen voor lifecycle beleggen en u kunt dit niet aanpassen”

  4. At the moment I’m 100% in NN Index Rendement Fonds, with an build of to 45% at retirement.

    It seems that besides of 11 NN funds I can only choose out of SSga EMU Government Bond Index Fund or iShares MSCI World EUR Hedged.

    But this ETF has an TER of 0.55% and I believe on top of that, plus 0.34% administration costs from NN when choosing your own path instead of the Lifecycle (0.14%).

    Not sure what to do, will keep on exploring (while NN doesn’t make it easy for you).

  5. Thanks for the post. It triggered me to look at my pension portfolio where the company that I work for invests 3% of my pensionable salary every month. I chose the “offensive strategy” last month which was “neutral” before. Currently, the portfolio is around 80/20 equities/bonds.

    VanEck Global Equal Weight UCITS ETF 62.4%,
    VanEck Global Real Estate UCITS ETF 11.6%,
    BlackRock Cust Euro Non-Sov Bond Index Fund 1 7.8%,
    BlackRock Euro Sovereign Bond Index Fund 1 7.8%,
    Northern Trust EM Custom ESG Equity Index Fd C EUR 6.3%,
    SPDR Barclays EM Local Bond UCITS 4%

    There is no option to select the funds other than choosing the investment risk. The current portfolio doesn’t look bad though. What do you think?

    The only thing that I’m not sure is should I contribute to my pension or not. Contributing some amount would be better but I couldn’t find the way to calculate the magic number that I need to put in.

    • Hi Sevil, thanks for stopping by! 3% of your pensionable salary is less than what you are allowed to put in. That means you will have some “jaarruimte”, most likely. Jaarruimte is the difference between what you are allowed to build up in your pension versus what you’ve actually did.
      You can use the jaarruimte to make tax-efficient contributions to a pension scheme (self-organised). This can be a savings account, investments, or insurance. There are some caveats: the account has to be blocked. My colleague blogger Mr. FOB has written a great article about how this works (it’s in Dutch).

      The “magic number” you refer to doesn’t exist. You can either choose to put in your full jaarruimte, or less, whatever you prefer! The pros are that you can deduct this contribution from your taxable income, and on the wealth you build up in this pension account you don’t pay any wealth tax. That is a great feature. However, this money is locked up until your retirement age, which makes it very inconvenient if you need to money soon.

      • Thank you for the quick reply. I just read that and the new posts thanks to Google Translate. They shed some light.

        My retirement age seems 68. The question that I have, do I really need that money that is accumulated on AOW + company’s pension scheme when I’m 68? Would they be just extra. I’m in my 30s and plan to get retired in 20 years. Which means I won’t be able to touch the pension investments for 18 years unless I pay the penalty.

        Now, I learned that I can contribute my pension 7 years back. I’ll keep investing regularly and get more experience in investing. If it makes sense to contribute my pension in a few years I’ll do that.

        I cannot take action if I’m not 100% sure :)