Buying a guaranteed pension with Pension Click

The employee subsequently invests in accordance with the ‘Index-tracking' type of investment with a 'Balanced' investment risk’. The higher-risk investments are reduced to 0% (fixed benefit).

If he has 100% of the value of the investments and the entire contribution for his pension invested from today up until his retirement date, this is expected to yield the following gross old-age pension:

If the employee purchases a guaranteed pension using €10,000 of the value of his investments in his pension scheme, this will yield €367 gross in guaranteed old-age pension per year. We will continue to invest the remainder of the value and the entire contribution. In total, he is expected to receive the following in gross pension from investments and guaranteed pension:

The employee wants to use 10% of the contribution each month to purchase a guaranteed pension. This is approximately €305 per year. In the 18 years between now and his retirement date, this is expected to yield him €288 gross in guaranteed old-age pension each year. For this entire period of 18 years, we are using the rate for the period from 1 November through to 15 November 2021. In reality, however, the rate is set afresh every two weeks.

In total, he is expected to receive the following in gross pension from investments and guaranteed pension:

For these examples, we have assumed that the following applies for the pension scheme of this employee:

• Pensionable salary: €36,500
  This is the salary on which the employee can accrue pension via his employer and under the Dutch State Pension Act (AOW).
• State pension offset: €15,599
  This threshold amount is the portion of the salary for which the employee cannot accrue any pension via his employer because he is also entitled to a Dutch state pension.
• Investment style:
  - type of investment: Index-tracking
  - investment risk: balanced
  - risk reduction: to 0% (fixed benefit)
  - age for reduction: 68 years.
  The investment style influences the value of the investments the employee will use to purchase a pension benefit.
• The employee’s salary and pension scheme remain unchanged until his retirement date.

For the purchase of guaranteed pension, the following applies in the examples:

• For each purchase, payment costs of 7.5% of the amount the employee uses to purchase a guaranteed pension are charged, up to a maximum of €2,000 per purchase. These are the costs for paying out the pension benefit.
• The rate for the purchase of a guaranteed pension is for the period from 1 November through to 15 November 2021. The rate is calculated using the current interest rate and an estimation of people’s longevity. The rate factors in 0.67% in capital lock-up costs and 0.13% in administrative expenses. We deduct these costs from the current interest rate. The capital lock-up costs are costs we incur to satisfy the solvency requirements set by De Nederlandsche Bank.

The examples presented three expectations: ‘Below expectation’, ‘As expected’ and ‘Above expectation’. These expectations show what consequences the economy can have on your total pension benefit. The state of the economy can influence the amount of your pension. This is because we invest (a portion of) your pension money and due to the influence of interest rates, among other factors. Effectively predicting how the economy will develop is difficult. To give you a better understanding, we provide three amounts for your investment-linked pension. We have calculated these amounts in accordance with the calculation method prescribed by law.

• As expected (‘expected weather’): this is the pension you seem likely to receive provided economic conditions develop in accordance with expectations. Please note that this is an estimate.
• Below expectation (‘bad weather’): will the economy be entering a downturn? In that case, investments are usually worth less. Furthermore, a low interest rate also has an impact, possibly causing your pension to be lower than expected. That’s when conditions are below expectation.
• Above expectation (‘good weather’): will the economy be entering an upturn? In that case, investments are usually worth more. Furthermore, a high interest rate also has an impact, possibly causing your pension to be higher than expected. That’s when conditions are above expectation.

Note: the amounts indicated next to ‘below expectation’ and ‘above expectation’ are not minimum and maximum amounts. There is a possibility that your pension benefit will be even lower or higher.