A working paper published by the Netherlands Bank assesses what impact liquidity and capital constraints have on how managers allocate defined benefit pension funds to illiquid assets.

In Pension funds’ illiquid assets allocation under liquidity and capital constraints, Dirk Broeders, Kristy Jansen and Bas Werker use quarterly data from 220 Dutch pension funds from the beginning of 2012 to the end of 2016.

Funds face liquidity constraints, the authors say, from “short-term pension payments and