This paper explores the historical relationship between welfare funds and financial regulation, which Estevez-Abe (2001) has called “the forgotten link.” Through financial regulation, the state is able to steer capital accumulated in welfare funds to its desired investment objects, including the purchase of public debt. Combining both quantitative and qualitative analysis, the research maps the financial flows between Dutch pension funds and the broader political economy over the course of the 20th century and until the great financial crisis of 2008, while at the same time shedding light on the political considerations that informed the funds’ investment policies. Special attention is given to the investment politics of Dutch pension fund for public employees, ABP (Algemeen Burgerlijk Pensioenfonds). The research shows how over time ABP´s investment politics became increasingly caught between the political interests of the state on the one hand and the dictates of dominant financial theories on the other hand. Under influence of European financial integration in the 1990s, pension investment rules were deregulated, not just in the Netherlands but also in other European member-states. Rather than forming a direct link with the state, pension capital now travels through extensive investment chains (Arjaliès, Grant, Hardie, Mackenzie, and Svetlova 2017) all over the world. The result is a loss of public control over the flows of capital that emanate from the Dutch pension funds on the one hand and growing instability within the private pension system on the other hand. The paper argues that this historical development is indicative of the ongoing financialization of the welfare state within other political economies, that rely on capital-funding in their pension systems. Engaging with theories from Comparative Political Economy and financialization studies, this paper is part of a larger project on the historical relationship between the Dutch welfare state and the financial system.