Investing in lifecycles: how it works

At BeFrank, we invest your employees’ pension contributions using the lifecycle method. That means we take their age into account. It allows us to ensure increased certainty about their final pension. Here’s how we go about it.

Risk reduction

The closer employees come to their retirement age, the less risk we take when we invest. We gradually change the investment mix.

In doing so, we reduce the investment risk and interest rate risk. That way, your customers can offer their employees the best, most secure pension possible.

Each year, we assess whether we need to improve our investment offering. Our goal is to ensure the best ratio between risk and return as well as an increasingly sustainable investment policy.

Select a risk profile

At BeFrank, we not only limit the investment risk – we also inform you about the risks. It is important to us that employees have a voice when it comes to investment decisions. After all, it’s their future at stake. At BeFrank, employees choose between five forms of lifecycle investment: very defensive, defensive, neutral, offensive and very offensive.

Age styling

Some employees are already aware that their actual retirement age is later than the age specified in their pension scheme. In that case, we advise that they shift their risk reduction moment to their expected State Pension Age. That way, the accumulation of their pension is better adapted to their personal situation. We call this ‘age styling’.

Which lifecycles do we have?

In addition to investment risk, we also have different forms of investment at BeFrank. Your customer selects the standard form of investment for the lifecycle. Employees can change the form of investment at any time.

The three forms are:

1. Passive lifecycle

If your customer opts for passive investing, we will mainly invest the pension contributions in funds that aim to follow the market as closely as possible (index trackers). These funds follow the stock market development as closely as possible without deviating from the market. The only exceptions are deliberate exclusions in the context of responsible investment.

2. Active lifecycle

With this form of investment, we invest pension capital in funds that are actively managed with the aim of outperforming the market. Appointed asset managers respond to market developments. In doing so, they try to get better returns in the long run.

3. Sustainable lifecycle

This lifecycle consists of funds from Triodos. We only invest in companies, governments and organisations that have demonstrated their positive impact on the world.

Good to know: we invest as sustainably as possible in all three lifecycles. Want to find out more? Discover which sustainable choices we make throughout each lifecycle.

Continued investment after employees reach the retirement age

Under the Premium Schemes (Improvements) Act, employees are allowed to continue investing after they have reached their retirement date.

With variable pension benefits, all or part of their pension capital is still invested after that date. This increases their chance of a higher pension. The amount of their pension benefits is also less dependent on market interest rate at one point in time.

If an employee already knows that they want to continue investing, it’s wise to factor this in while they are accruing pension. After all, it broadens their investment horizons.

For this reason, BeFrank has developed lifecycles with customised risk reduction. That way, the investment mix aligns with the risk profile throughout the period. Want to find out more? Read our page on continued investment after employees reach the retirement age.

Employers can also choose to include continued investments after retirement age as a standard option in the pension scheme under the Future of Pensions Act.

Do It Yourself investing

At BeFrank, employees have the option to make their own investment decisions if your customer allows it. They can choose from a variety of investment funds from well-known fund houses like Blackrock, Schroders and Northern Trust.

Employees can notify us of all these decisions on their personal pension page in a few simple steps.