BeFrank’s investment policy
At BeFrank, we arrange pensions for employees of many employers. We do this through a pension scheme based on a defined contribution. On this page, we explain what this means and tell you more about the principles of our investment policy.
How does a defined contribution pension work?
At BeFrank, you build up pension capital through investing. This capital grows through the contributions paid by your employer and through the returns on your investments.
On your retirement date, you use your accrued pension capital to purchase a pension. You choose the pension administrator from which you purchase a pension. Good to know: This is not possible at BeFrank. Only pension accrual goes through us. You then receive a monthly pension from this provider for the rest of your life.
The principles our investment policy
Investment performance is therefore important for achieving a good pension outcome. We are responsible for how our experts invest your pension capital. However, if you choose to invest yourself, you are responsible for your own investment decisions (if this option is available).
We have defined the following principles for our investment policy:
- Your pension contributions and returns determine your pension
You build up pension capital through contributions paid by (you and) your employer, as well as through investment returns on that capital.
However, investing also involves risks. At BeFrank, we carefully assess these investment risks. Over the long term, we expect investing to result in a higher pension. By managing risks effectively, you have a good prospect of a solid pension. While keeping pension contributions affordable for your employer. - A balanced approach to returns and investment risk
At BeFrank, we invest according to the lifecycle approach. This means we take your age into account. The closer you are to retirement, the less investment risk we take. This provides greater certainty about the level of your pension.
We always aim for the best balance between return and risk. We invest for the long term, in line with your age. When you are younger, the focus is mainly on returns. This is called the accumulation phase. As you approach your retirement date, the decumulation phase begins. We gradually reduce investment and interest rate risk. We do this by investing more in matching funds. Read more about how matching funds work.
If there are sudden turbulence in the financial markets, this approach reduces the impact on your final pension. However, it is important to realise that the risk of poor investment results will always remain. - Appropriate investment risk and freedom of choice
Some people prefer to take more investment risk than others, and we understand that. That is why we offer different investment risks: very defensive, defensive, neutral, offensive or very offensive.
You can choose the level of investment risk that suits your personal situation. To determine what is right for you, you complete a questionnaire. This is called the Risk Profiler. Based on your answers, you receive a risk profile. You can then decide whether to invest according to this profile or choose a different level of investment risk.
- Choice of investment style
Your investment style determines how we invest your pension capital. Your employer selects a default investment type, but you can change it yourself. You can choose between Passive, Active or Sustainable investing. Whichever option you choose, we invest your pension capital globally across different companies, sectors and asset classes. This diversification helps to reduce risk.
- Passive investing
As the name suggests, this investment type is passively managed. This means we follow the market instead of trying to beat it. The goal is to track the market as efficiently as possible. Returns may deviate slightly from the market, both positively and negatively, but we expect these deviations to be temporary.
Passive investing is suitable for participants who prefer simplicity and do not want to be surprised by returns that differ significantly from the index. It also offers sustainable investing at relatively low costs. - Active investing
Active investing is for participants who believe in active management. This means investments are actively selected and adjusted in response to market developments, aiming to outperform the market over the long term and achieve higher returns. To support this approach, we use the expertise of Goldman Sachs Asset Management.
If you choose active investing, it is important to accept that returns may deviate more from the market than in Passive investing, both positively and negatively.
We expect larger deviations to diminish over the medium term. The costs of Active investing are somewhat higher than Passive investing. And the funds are more sustainable, in line with our objectives. - Active investing
This investment style focuses on sustainability. We invest more selectively in sustainable companies than in Active or Passive investing, and we apply a stricter exclusion policy.
If certain investments do not meet our sustainability criteria, they are excluded. It is important to note that investment costs are higher and returns may deviate more from the market than in Active investing, both positively and negatively. We expect larger deviations to decrease over the longer term. If you are comfortable with this, this investment type may suit you well.
- Our sustainable investment policy
At BeFrank, we invest your pension for the future. A pension is not only about money, but also about the world you will live in later. Sustainable investing is therefore an important part of our investment policy and is also a form of risk management, as companies can be better prepared for the future. Each investment style has its own sustainability ambition. Across all investment styles, our asset managers exercise voting rights and engage with companies on sustainability topics. Sustainalytics also engages with companies on our behalf.
Would you like to learn more about our sustainable investment policy?
- Sustainable Finance Disclosure Regulation
BeFrank is subjet to the Sustainable Finance Disclosure Regulation (SFDR) of the European Union. Waht is the aim of this regulation? The aim is to improve transparency about how financial market participants take ESG risks and opportunities into account in their investment decisions. Would you like to know more? Read our page on the Sustainable Finance Disclosure Regulation. - Managing costs
We believe it is important to keep investment costs low, as costs – alongside returns – determine the level of your final pension. Where possible, we aim to prevent excessive withholding of dividend tax. If possible, we reclaim withheld dividend tax, which provides an additional benefit for you.
- Minimal impact on returns and costs
BeFrank strives to follow the best possible SRI policy appropriate to each form of investment. However, for the passive style, the criterion is that the effect on return and costs must be extremely limited.
In the active form of investment, sustainable investing may lead to a greater deviations in return. In the sustainable form of investment, major deviations from the benchmark are accepted, along with a simplified strategic mix and higher investment costs. - Simplicity, diversification and availability of pension capital
At BeFrank, we prefer simple investments to avoid unnecessary complexity. Our investments, instruments and investment strategies must be understandable. We aim to explain them clearly and make outcomes as predictable as possible.
We value diversification, but there are limits. Diversification reduces the risk of an investment portfolio. We strive for an optimal balance between effectiveness and simplicity. We only include an asset class if it adds value and fits the characteristics of the investment style. We also avoid concentration risk across sectors, regions or countries.
The pension capital must always be accessible to employees. We can place a sell order on any business day. It may take one or more working days before the transaction is completed.
- Governance: a well-structured investment process
Governance concerns how we structure the investment process. We have organised this so that the Board remains fully in control at all times, supported by risk managers and experts. BeFrank is ultimately responsible for the investment policy, which we have developed independently.