All about matching funds

Market interest rates have been very low for years. Interest rates have been rising since 2021. If you are about to retire, you will see that your pension capital decreases. This is because we increasingly invest in matching funds as you get older. We don’t just do that. We have a good reason for that. Because as crazy as it may sound, it keeps your pension as stable as possible. We explain it to you.

This animation explains how matching funds work in less than 2 minutes. Or read the explanation below the animation.

Your pension capital is invested
Your employer has opted for a BeFrank pension scheme. At BeFrank we invest your pension capital. Because, in the long run, returns on investments are nearly always higher than for savings. However, investing also always involves risks. We limit the risk for your pension capital by using a broad spread of investments. We also lower your risks as you get older. We do this by increasingly investing in matching funds.

Good to know: you also have influence on how much risk you take with your pension capital. Fill in the Profile Selector and see which investment risk suits you best. Done quickly!

Matching funds provide stability
How do matching funds work? When you retire, you purchase a pension. You will receive that for life. The amount of your final pension depends on the amount of your pension capital, but also on the interest. We cannot predict whether interest rates will rise or fall when you purchase your pension. Nevertheless, we want to prevent your expected pension benefit from fluctuating a lot as you approach your retirement age. That is why we increasingly invest your pension in matching funds as you get older. Because matching funds react opposite to interest rates. This way we keep your expected pension benefit solid. How does this work?

  • If the interest rate falls, you can purchase a lower pension with your pension capital. So you need more capital for the same pension. Matching funds react in the opposite direction to interest rates and in this case provide a higher return. So you still purchase approximately the same pension.
  • If the interest rate rises, you can purchase a higher pension with your pension capital. So you need less capital for the same pension. Matching funds react in the opposite direction to the interest rate and in this case provide less return. So you still purchase approximately the same pension.

Example calculation: amount of capital and pension to be purchased in graphs
The graph and table below show how the pension to be purchased (gross annual amount) increases as the pension capital decreases. This example applies to a 67-year-old ‘model person’ with a partner of three years younger.
(Click to enlarge the picture)


View a PDF with more graphs and explanations here

Current news: interest rates are rising, but don’t panic!
Now that interest rates are rising, the matching funds are achieving negative returns. The matching funds now do exactly what they have to do: they keep your expected pension stable. Is it wise not to invest in the matching funds? We continue to invest in matching funds in our lifecycles. Interest rates are unpredictable and can fall again. If we were to leave the matching funds now, we would no longer keep the level of your pension benefit stable. We would be taking a risk with your pension benefit, and we don’t want that. Do you really not want to invest in matching funds? Then you can opt for Do It Yourself investing in some schemes. You then decide yourself in which funds you invest.