Close to retirement, what now?

Your pension capital will become available on your retirement date, and you will use this to purchase a pension. On this page you can read how we protect your investments against fluctuations in interest rates and shares. You can also read what options you have when you are about to retire.

Interest-rate fluctuations
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. Please note: the returns of matching funds can still rise or fall due to interest rate fluctuations. But don’t worry, that’s exactly what matching funds should do. In this way they keep your pension to be purchased stable. Do you want to know more about matching funds? You can read about it here.

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:

  • you will incur interest rate risk on your pension capital, so that a change in the interest rate will have consequences for your projected pension benefits. With lifecycle investing we hedge this interest rate risk by investing in matching funds
  • you may miss out on rises in equity prices if the financial markets recover
  • management fees will still be charged

Immediately before your retirement date
Before you retire, you have the following choices:

  • Fixed or variable pension
    A fixed pension gives you certainty regarding the amount of your pension benefit, but you will no longer be able to benefit from any later appreciation in the stock market or from a rise in interest rates. With a variable pension, part of your pension capital continues to be invested, so you continue to have an opportunity to benefit from a rise in the stock markets and/or interest rates for longer. A variable pension therefore does not offer the certainty of a fixed pension, and may be higher or lower from one year to the next.
  • Deferring your retirement date
    While you are still employed, you do not have to purchase a pension and your pension capital can continue to grow. This is possible if you have not yet reached your retirement date. You can defer your pension for up to 5 years after you reach the age of entitlement to state pension (AOW).
  • You take partial (part-time) retirement
    In this case, you will receive a benefit for this part. Your pension capital can continue to increase for the part that you continue to work.

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.