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 interest rates go lower. On the other hand, the funds lose value if interest rates rise. 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 rates and you can be more sure of your situation.
Fluctuations in equities
The return portion that is the focus in the younger years should bring about capital growth in the contributions. For this, we invest in equities, among other things. If you invest according to the standard risk profile, in the last year of your pension accrual up to 15% of your capital is invested in return funds. 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 risk?
You could consider one of the following options:
1. If you no longer want any risk from 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 give greater certainty about the level of your pension. The projected pension benefits will subsequently be influenced very little 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 pension page.
Please note that if you do not invest:
– you may miss out on rises in equity prices if the financial markets recover.
– you will incur an interest risk on your pension capital, so that a change in the interest rate will have consequences for your projected pension benefits.
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.