The corona crisis has once again made it clear: some investments involve considerable risk. This also applies to pension savings through the bank. Fortunately, if you do retirement savings through an insurer, you don’t have to worry. Here are how you can save pension savings without risk.
If you want to participate in pension savings, you have two options: either you save an extra pension capital together through a bank pension savings fund, or you do this via a pension savings insurance with an insurance company. About half of the pensioners chose the first option, the other half the second.
If you do retirement savings through a bank, your deposits are invested in a fund with shares and bonds. Its value then tilts with the waves of the financial markets.
With rising stock prices, you can win (a lot), with falling prices (a lot) lose. You could clearly see that the latter was not a non-binding warning in recent weeks. Those who opted for the low insurance company for pension savings fund saw 19% of the value of their investment evaporate between New Year and March 25. This was hardly less at a better insurance company with a drop of 18%.
For those who still have to save for a long time, that may not be so bad. Stock markets are continually recovering from a dip over a long period.
It is different for those who are already shortly before their retirement age. Seeing 20 percent of a more significant capital melt away comes in hard.
Nevertheless, some formulas guarantee the certainty of capital at all times. This is useful for those who are really counting on their supplementary pension by the time work wages disappear.
This is possible with pension insurance. Here, an insurer guarantees that the pension saver will receive a guaranteed interest on his deposits. For example, this is still 0.90% at Argenta Flexx. It is, therefore, already sure of that yield, regardless of developments in the financial markets.
In addition to this guaranteed yield, the pension saver can still receive profit participation, depending on the success with which the insurer can reinvest the deposits. That situation is reviewed annually. However, there is no guarantee of a profit-sharing. In bad times it can be equal to zero.
All this means that the nominal value of the accumulated capital cannot fall and is therefore suitable for those who want to play it safe.
Lower guaranteed interest
Some insurers offer a 0% guaranteed rate formula. This means that for these contracts, all proceeds must come from the profit participations. However, once assigned, they can no longer be lost.
Pension savings insurance with a lower guaranteed interest rate is not necessarily less favorable. In fact, higher profit participation is more often granted on such agreements.
In addition, there is a tax benefit. When the pension saver turns sixty, the government will withhold a so-called anticipative levy. And with pension savings insurance, this is only calculated on the paid-up capital plus the proceeds from the guaranteed interest. The income from the profit-sharing is therefore exempt from tax.
Those who opt for pension savings insurance should also take a good look at the costs charged by the insurer. High costs can eat away part of the yield.