What is preparing for a Fixed or Variable Pension?
Zwitserleven ensures that your investments match your age, your salary and your retirement age. We call this investing via the Smart Standard. For example, if you are young, then you are automatically invested more in stocks and other categories which are targeted at reaching a high return. These investments have a higher risk. The returns are needed in order to accrue a sufficient pension. Furthermore, in downturn periods there is still sufficient time to compensate. The older you get and the closer you are to your retirement date, your investment risk is automatically reduced.
On the retirement date, the accrued pension capital is converted into a Fixed or Variable Pension benefit from an insurer. You make the final choice for a Fixed or Variable Pension on the retirement date. But your provisional choice is already important during the period in which you accrue pension. This is because the investments can differ from each other when preparing for a Fixed and Variable pension from 20 years before the retirement age.
- What is a Fixed Pension?
- With a Fixed Pension, you purchase a retirement pension and possibly a partner’s pension from an insurer when you retire from the pension capital. The amount of your pension is fixed on the retirement date. And so it is certain. We therefore call this option Fixed Pension. Once you have retired, you no longer take any investment risks with a Fixed Pension.
- What is a Variable Pension?
- A Variable Pension works differently. When you retire, the insurer will use part of your pension capital to pay your pension benefit in the first year. The amount of that benefit is then fixed for one year. The payments in subsequent years depend on the development of the value of your investments. Your remaining pension capital will continue to be invested by the insurer after your retirement date. Because your pension capital is invested, the amount of the pension benefit may change. The benefit is therefore not certain. We therefore call this option Variable Pension. If the investments go well, the pension benefit can be higher. But the benefit can also be lower if things do not go well with your investments. With a Variable Pension you therefore also take investment risks after the retirement date.
By default, we assume that your investments are preparing for a Fixed Pension.
Although you only make a final choice for a Fixed or Variable Pension on your retirement date, it is important to inform us of your provisional choice at an earlier stage. We will then take your expected choice into account before your retirement date.
If you prepare for a Fixed Pension, you will no longer invest, or only invest a small part, in the Rendement fund when you retire. This is more in line with a Fixed Pension where you no longer take any investment risks after your retirement date.
If you choose to prepare for a Variable Pension, you will still invest, or for a larger part, in the Rendement fund when you retire. This is more in line with a Variable Pension where you still take investment risks after your retirement date.
Who is preparing for a Variable Pension intended for?
Preparing for Variable Pension can be interesting if you want to choose for a variable pension benefit from your retirement date. Or if you want to invest with more risk before your retirement date by investing a larger part in the Rendement fund.
Attention!
Preparing for variable pension does not mean that you will actually receive a variable pension benefit. On your retirement date, you make the final choice as to whether you will receive a fixed or variable pension benefit.
When is preparing for a Variable Pension suitable?
There are advantages and disadvantages to preparing for a Variable Pension. Whether it suits you depends on what you find important. And your financial situation, now and in the future.
Pros
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You invest more in the Rendement fund, which means that you are expected to achieve a higher return.
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Your investments are more in line with a Variable Pension from your retirement date.
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As your retirement date approaches, we will still ensure that you invest less and less risky.
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You are free to prepare for a Fixed Pension in the meantime.
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You are free to choose a Fixed or Variable Pension with an insurer on your retirement date.
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You can combine preparing for a Variable Pension with other choices that affect your investments. Such as choosing for a different retirement age or Smart Investing. For these choices, see the information on this website.
Cons
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You have less certainty about the level and purchasing power of your income when you retire.
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You invest more in shares and other investments that are riskier. When stock markets fall, you may have less pension left over. Zwitserleven is not responsible for the return on investments and whether this yields the expected pension.
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If you do choose for a Fixed Pension on the retirement date, the composition of your investments until the retirement date is less in line with the purchase of your fixed benefit. We will then sell all your high-risk investments in one go. If the price of these investments is low at that time, this can lead to a lower pension income.
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You cannot combine the choice for preparing for a Variable Pension with the choice for Self Investing or the Pension Stabiliser. For these choices, see the information on this website.
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You are personally responsible for ensuring that the risk of preparing for Variable Pension is in line with your personal situation (risk profile). When choosing a Variable Pension, Zwitserleven determines whether the risk you can and want to take is appropriate for preparing for a Variable Pension. If this is not the case, we advise against choosing a Variable Pension.
Suitable:
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If you intend to choose for a Variable Pension from your retirement date.
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If you are willing to continue to invest with more risk with your pension capital until the retirement date. And you want to take advantage of the chance of a higher pension income.
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If certainty about the amount and purchasing power of your pension is less important to you.
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If you can absorb any disappointing results. For example, by settling for less income after you retire. Or to save in the pension scheme. Or postpone your retirement.
Not suitable:
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If you intend to choose for a Fixed Pension from your retirement date.
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If you want more certainty about the level and purchasing power of your income when you retire.
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If you are about to retire and expect stock markets to fall in the period up to your retirement date.
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If you want to put together your own investment mix via the option “Self Investing”.
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If you want more certainty about the amount and purchasing power of your pension via the Pension Stabiliser.
What other options are there for your investments?
If you want to increase your expected pension income by taking more investment risk, you can also adjust your investment mix in other ways:
- By choosing for Smart Investing and choosing for a higher expected income. You will then reduce the investments in the Rendement fund later. But to a lower percentage than in preparing for a Variable Pension. This means that you are not optimally prepared for a Variable Pension when you retire.
- By choosing Self Investing and making your own investment choices. In contrast to preparing for a Variable Pension, the risk of your chosen mix is then no longer automatically reduced as you get older and approach your retirement age.
How do you choose preparing for a Variable Pension?
If you do not make a choice, you will prepare for a Fixed Pension.
On the Dashboard of your participant portal you can adjust your investments via the arrow “Adjust investments” in the tile “Your pension investments”. Via the button “What choices do you have?” you can then open the selection menu for preparing for a Fixed or Variable Pension.
In this menu you can see the consequences for your expected income. But also for your income if things go well (optimistic income) or if things go against you (pessimistic income). You can see your pension results on your retirement date and 10 years after your retirement date. We also show your investments before and after your choice before you confirm your choice.
Subsequently, a questionnaire is used to test whether the choice of preparing for a Variable Pension is suitable for you based on your risk profile.
If you submit the choice for a change to preparing for a Variable Pension no later than a few working days before the end of the month, this change will be processed in the following month. If you wish, you can switch to preparing for a Fixed Pension at any time.
When does preparing for a Variable Pension stop automatically?
If you have chosen preparing for a Variable Pension and you do not make any other investment choices, you will continue to prepare for a Variable Pension until you retire. Even if you leave your employer before your retirement date, you will continue to prepare for this.
If you choose for Self Investing or the Pension Stabiliser, you automatically stop preparing for a Variable Pension. Your investments will then no longer be prepared for the choice of a Variable Pension when you retire.
Preparing for a Variable Pension (or for a Fixed Pension) also automatically ends when you retire. At that time, all your investments will be sold at Zwitserleven and you can purchase a Variable Pension or a Fixed Pension from an insurer.
How do you stop preparing for a Variable Pension?
You can choose to prepare for a Fixed Pension at any time via the participant portal. On the Dashboard of your participant portal you can adjust your investments via the arrow “Adjust investments” in the tile “Your pension investments”. You can indicate your choice again via the selection menu for preparing for a Fixed or Variable Pension. If you choose for preparing for a Fixed Pension, you switch to Smart Investing. When you retire, you will then no longer invest, or only invest a small part, in the Rendement fund.
If you want, you can immediately make other investment choices afterwards.
Need advice?
We are pleased to assist you with your retirement choices. Those choices can have major financial implications. Our guidance is only about your Zwitserleven Pensioen. Whether a choice is right for you naturally depends on your entire personal situation. Now and in the future. Have you thought about asking an advisor? They can give you an overview of all your financial affairs. And help you make the most appropriate choices.