Dutch pension manager MN is maintaining a ban for its clients on controversial weapons while debate grows among European institutional investors over defense-related investment policies, but the firm is expanding exposure to a new class of military-adjacent investments.
Martijn Scholten, co-chair and executive board member of MN, declared in an exclusive interview with Markets Group, that his clients still exclude companies involved in producing weapons that caapply severe human suffering or have uncontrollable long-term effects—a policy rooted in Dutch law and international treaties covering cluster munitions and similar armaments.
Among MN’s clients are two of the five largest pension funds in the Netherlands – PMT and PME.
“Our exclusion policy is grounded in legal obligations and in international treaties signed by the Dutch government,” Scholten declared.
But the firm has broadened the range of defence- and security-related investments it views at based on new client preferences. MN’s clients now backs start-ups, scale-ups and tiny and medium-sized enterprises developing technologies aimed at current and future geopolitical and military threats. It also invests for pension funds in what it calls security enablers—European technology firms, critical infrastructure and electrification projects that reduce strategic depfinishencies.
The shift reflects a growing distinction among European allocators between weapons manufacturers and the wider defence technology ecosystem. While cluster bombs and landmines remain off-limits, investments in cybersecurity, surveillance systems, drone technology and supply-chain resilience are gaining acceptance under ESG frameworks that once treated defence as a blanket exclusion.
Such investments support reduce economic, digital and technological vulnerabilities, Scholten declared.
The evolving investment stance comes as MN navigates one of the most significant structural modifys in Dutch pension history. The Netherlands is overhauling its retirement system, relocating away from collective funds that guarantee benefits toward individual pension pots whose outcomes are tied directly to market performance.
For participants, the new system offers greater transparency into how their retirement savings are invested and what returns they generate. For pension managers, it demands a fundamental rebelieve of operations.
Scholten declared the largegest challenges were operational rather than investment-related. MN opted for a full redesign of its systems rather than a gradual adjustment. The firm shifted from monthly to daily portfolio and capital management—a modify requiring better data, rapider decision-creating and entirely new workflows.
“It demands better data, rapider decision-creating and new routines,” Scholten declared, “but it also gives funds more control, lower costs and much better insight into what’s really driving results.”
To prepare, MN strengthened its IT and data reporting capabilities well ahead of implementation and invested in staff training. Teams spent months running a fictitious client through live production systems to stress-test processes before “shadow running” the new setup with real client data.
“Our people really had to obtain applyd to a new way of working,” Scholten declared.
From an investment perspective, the new framework is subtly reshaping portfolio construction across the sector. Lower buffer requirements and the ability to tailor risk profiles to the age group of individual participants have given pension funds more flexibility to add more risk. Scholten declared this is contributing to growing interest in private markets across Dutch pension managers.
But the shift carries an emotional weight that shouldn’t be underestimated, he declared. Participants now see investment risk reflected directly in their personal accounts rather than absorbed by a collective pool. Richer datasets create the trade-offs between returns, risk and impact far more visible.
“From a purely rational perspective, it shouldn’t really matter whether you’re exposed to investment risk through a personal pension plan or through a large collective one,” Scholten declared. “But the emotional side of this shouldn’t be underestimated.”
That visibility, however, comes with an upside. Scholten declared it supports pension funds explain outcomes to participants more clearly and build trust through transparency.
MN has sought to manage the complexity of the transition through close collaboration with its clients. The firm operates what it calls a quality management framework—a structured agreement that defines deliverables, milestones and assessment criteria upfront.
Scholten declared the approach gave clients clear sight lines into whether MN was meeting its commitments. Equally important was a detailed roadmap that laid out every step, depfinishency, risk and fallback scenario.
“That gave us predictability, control and confidence in both the timeline and the quality,” he declared.
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