Returns in the risk reduction phase

As the retirement date approaches, we reduce the investment risk. Exactly when this moment is depends on the risk profile of your employee. We reduce the investment risk by increasingly investing in matching funds.

Matching funds stabilize pension value

Matching funds have a relatively low investment risk and they protect against a fall in interest rates. Because, the lower the interest rate, the more expensive it is to buy a pension. The other way around also applies: the higher the interest rate, the cheaper it is to buy a pension. In this way, these funds ensure that your pension capital remains as stable as possible towards your retirement date. However, this does mean that the value of the investments can still fluctuate considerably just before the retirement date.

Interest rate rise and effect on returns

Interest rates rose in 2021. This interest rate rise continued through the first quarter of 2022. This interest rate rise is causing negative returns on the matching funds and other bond-related investments. However, the negative returns are offset by the fact that pension purchases are becoming cheaper.

Delayed effect on pension purchase price

We see an effect of the interest rate rise on investment returns. The fall in the purchase price of a pension is not yet reflected in the current offers for the purchase of a pension. This means that employees who are currently retiring do not (yet) benefit optimally from the effect of the matching funds.

As BeFrank, we have no influence on the offer of other parties that offer the final pension. It is not known when the purchase prices of pensions will drop (more).