Investing for your pension, how does it work?

How investing works

Every month, your employer pays an amount, known as a pension contribution, into your pension savings. You cannot access these savings until you retire. In the meantime, we invest your pension savings for you. For example, by buying shares in companies or lending money to companies and governments by investing in bonds.

Investing gives your pension savings the opportunity to grow. This growth is called a return. Any returns remain part of your pension savings and are invested again. This gives your pension savings the opportunity to grow further.

Unlike interest on savings, investment returns are not fixed. If the investments perform well, your pension savings increase in value. If they perform less well, their value may fall. But because your pension savings are invested for many years, there is usually enough time to absorb these fluctuations.

Why investing for your pension often works better than saving

When you save, you know how much interest you will receive. With investing, you do not. The value of your shares can rise quickly or slowly, but it can also fall. That is part of investing. Investing is something you do for the long term. Over the long term, investing gives you a greater chance of ending up with more money than saving does.

That is why we invest your pension savings for you.

But if investments can rise and fall in value, how do you know whether you will have enough pension later?

How we manage your risk

If you still have many years to go before you retire, there is more time to absorb fluctuations in the financial markets. This means we can often take slightly more risk during these years.

As your retirement date gets closer, we gradually reduce the risk. This reduces the chance that a disappointing year on the financial markets just before you retire will have a major impact on the pension payments you receive from us.

So we invest in a way that fits your stage of life. This is called lifecycle investing.

We gradually reduce the investment risk, but you decide how much risk you want us to take with your pension savings. You can easily set this in mijn.nn.

• Choose more risk? You have a greater chance of higher returns. But the value of your investments can also fall more sharply.
• Choose less risk? The value of your pension savings will usually fluctuate less. But the chance of higher returns is also lower.

Take the test: how much risk is right for you?

You decide how much risk we take when investing your pension savings. But making that decision can be difficult. How do you know what is right for you?

In mijn.nn, you can take a test. We ask you a few questions and then show you which investment choices may suit you. You do not need any knowledge of investing or finance.

And if your preferences change, for example because you start earning more, your home situation changes or you build up other pension savings in the future, you can easily change your preference.

Choose your investment preference in mijn.nn

Can I choose my own investments?

Some pension schemes also allow you to choose Self-Investing. This means you choose which of the investment funds available within your pension scheme we invest in for you, and how much risk you take. You are also responsible for reducing your investment risk in good time as you get closer to retirement.

See what options you have

The choices available to you depend on your pension scheme. Log in to mijn.nn to see the pension scheme your employer has arranged for you and find out what options are available.

See what has been arranged for you