The default investment style
There is a ‘default’ investment style for your pension scheme. If you do not make another choice, we will invest on your behalf in accordance with this default investment style. We have reached an agreement with your employer regarding most default options for investing in your pension scheme. But you may make alternative choices yourself for a number of components. This will allow you to align the investment style with your own preferences and situation. The overview below shows you the default investment style for each component. And whether you can deviate from the default. You can read more about your options for deviating from the default investment style under ‘Choices’.
Investing in a lifecycle or ‘Self-investment' |
Investing in a lifecycle |
Depends on employer |
Type of investment |
Employer’s choice |
Yes |
Investment risk |
Balanced** |
Yes |
Risk reduction to fixed or variable |
Fixed benefit |
Yes |
Risk reduction to Dutch state pension (AOW) or retirement age |
Employer’s choice |
Yes |
* Pensioen Plus applies the default investment style that you chose for your Persoonlijk Pensioen Plan.
** Your employer may have chosen another default.
Investing in a lifecycle
We invest on your behalf in a lifecycle by default. This means that we automatically reduce the risks of your investment-linked pension as your retirement date approaches. We do this by investing a progressively smaller part of your pension money in higher-risk investments (such as shares). And an increasingly larger part in our matching funds. The NN Liability Matching Funds reduce the risk of a low market rate when purchasing your pension benefit. They protect your pension in two ways:
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These investments have a lower risk, they are ‘risk-averse’. The more of your pension capital we invest in this way, the lower the risk of a sharp drop in your built-up pension. But there is also less chance that it will grow significantly. This means your pension will probably grow less in the years prior to your retirement date.
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The matching funds reduce the risk of a low market interest rate. On your retirement date, you will use your pension capital to buy a benefit. The amount of your benefit will depend on the market interest rate at that time and other factors. Are interest rates low? Then you will need more capital to purchase the same pension. The NN Liability Matching Funds reduce this interest rate risk. This is because these investments increase in value if interest rates fall. The opposite is also true: if interest rates increase, then the investment value will fall. However, you will also need less capital to buy the same pension.
Please note! The NN Liability Matching Funds are investment funds: we invest your capital, so you always run some risk.
A number of defaults have been included in your pension scheme for investing in a lifecycle. The table shows you which components you can deviate from in order to make a choice that suits your personal preferences.
Type of investment
The type of investment represents our approach to investing and how we spread the risks. There are two types of investment:
Your employer determines which type of investment applies by default to your pension scheme. See tier 2 of Pension 1-2-3, under ‘Which choices do you have?’. You can always opt for the other type of investment.
The current type of investment in which we invest for you can be found at mijn.nn Financial Future. Click on mijn.nn at the top right of this screen to log in, and then click on the name of your pension plan to go to Financial Future. You can find your current investment style by clicking on ‘Investments for my pension’ at the top under ‘Go to’.
Investment risk
Within the type of investment, we can invest in higher-risk and lower-risk investments on your behalf. The higher the risk we take when investing on your behalf, the higher your pension can be. And the lower your pension can be if the results of the investments fall short of expectations. Our default method of investment is according to the ‘balanced’ investment risk. Under conditions, your employer can choose the default investment risk for your pension scheme. In that case, your employer can choose from three options, ranging from lower risk to higher risk.
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more cautious
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balanced
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more ambitious
See tier 2 of Pension 1-2-3 under ‘Which choices do you have?’ for the investment risk that applies as the default for your pension scheme.
You can make another choice yourself. In that case, you have two additional options for lower-risk or even higher-risk investments: ‘more cautious +’ and ‘more ambitious +’. You can read more about this under the tab ‘Choices’.
Reducing risk to a fixed or variable benefit
Investing in lifecycles means that we gradually reduce the investment risk as your retirement date or your Dutch state retirement age (AOW age) approaches. This is because at that point there will be less and less time to reverse any possible setbacks in the investments. We reduce the higher-risk and lower-risk investments to fit a fixed pension benefit for you by default. This means are investing almost all your pension money in risk-averse funds on your retirement or AOW age. With this fixed pension benefit, your pension money will no longer be used to invest following your retirement date.
You can make another choice yourself: you can opt to reduce the risk to a variable benefit. This is a benefit whereby a portion of your pension money is invested following your retirement date. You can read more about this under the tab ‘Choices’.
Reducing risk until your retirement age or your Dutch state retirement age (AOW age)
The retirement age in your pension scheme and your AOW age are usually no longer the same. Your employer decides whether we reduce the risk by default until the retirement date in your pension scheme or until your AOW age. But you can make the other choice yourself.
Choosing your own investment funds (‘Self-investment’)
Your employer can also give you the option of choosing your investment funds yourself (‘Self-investment’). We call this ‘extended investment freedom’. If you opt for Self-investment, we will not invest in a lifecycle on your behalf. By choosing this option, you are yourself responsible for your investments. It is therefore also up to you to make sure that the degree of risk exposure is right for you.
If your employer does not offer this option, we will always invest in a lifecycle on your behalf. This is called ‘limited investment freedom’.
Whether your Persoonlijk Pensioen Plan offers extended investment freedom is shown in tier 2 of Pension 1-2-3, under ‘What choices do you have?’ In the case of the Pensioen Continu Plan, you can always opt for Self-investment. In the case of Pensioen Plus, you can opt for Self-investment if you can also do so for your Persoonlijk Pensioen Plan (your basic scheme). You can read more about choosing your own investment funds under the ‘Self-investment’ tab.