Your pension capital will become available on your retirement date, and you will use this to purchase a pension.
The amount of your pension depends on the level of interest rates at the time you purchase a pension, as well as the results of your investments. The lower that interest rates are, the lower your pension will be. We use matching funds to protect your pension to a large extent against the effect of interest rates. The value of these funds increases if the interest rate drops. On the other hand, the funds loses value if the interest rate rises. But you will still be able to purchase more or less the same pension. This means your pension is better protected against movements in interest rate changes and you can be more sure of your situation.
Fluctuations in equities
The return portion that is the focus in the younger years should provide capital growth on the pension contributions. For this, we invest in, among others, in equities. If you invest according to the standard risk profile, up to 15% of your capital is invested in return funds in the last year of your pension accrual. A decline in these return funds therefore will have a limited effect on your investments. We gradually reduce the proportion invested in return funds and increase the proportion invested in matching funds.
Are you retiring within a year and want to incur less investment risk?
You could consider one of the following options:
1. If you no longer want to invest in risky categories (like equities), you can convert your risk profile to Very Defensive. To do this, complete the Profile Selector to see whether it suits you. You will then no longer be investing in return funds, but entirely in matching funds. These matching funds can still rise or fall in value, but ultimately provide more certainty about the level of your pension. The projected pension benefits will subsequently be influenced less by developments in the financial markets.
2. If your pension scheme offers the option of Do It Yourself investing, you could also opt for this. You can then leave your pension capital in your pension account; it will not be invested. In order to activate Do It Yourself investing, you do need to correctly answer a number of questions about investing on your personal pension page. Please note that if you do not invest:
Immediately before your retirement date
Before you retire, you have the following choices:
You can read more about this on your personal pension page and you can compare different providers of pension benefits. Also consult a pension adviser.