A defined contribution scheme has many advantages, but also a disadvantage: employees do not usually know how much their pension will be until the retirement date. And that brings uncertainty. Zwitserleven is the only pension provider in the market to have come up with a solution: ProfielBeleggen with ZekerheidZwitch. ZekerheidZwitch is an innovative solution. It gives your employees more certainty and clarity about the amount of pension even before the retirement date.
How does ZekerheidZwitch work?
ZekerheidZwitch offers your employees more certainty and clarity about the pension that can be achieved as the retirement date approaches. To this end, we divided the pension in three phases.
Up to 15 years before the retirement date
The investment horizon is still long. During this period, investments are made with a little more risk. If your employee chooses HorizonBeleggen of ProfielBeleggen, Zwitserleven will take care of the investments. The risk is reduced only to a limited extent.
VrijBeleggen enables your employee to select Zwitserleven investment funds. It is your employee’s responsibility to start investing more cautiously as the retirement date approaches. This does not happen automatically with VrijBeleggen.
15 years before the retirement date
15 years before the retirement date, your employee is faced with an important choice. There are several important questions to be answered at that time.
- How much certainty do I want about the amount of my pension?
- How much investment risk do I wish to take up to the retirement date?
- Do I want to take an investment risk after the retirement date?
With the answers to these questions, your employee can make a well-informed choice about his or her pension at this important stage in their pension career. We will help your employees with this. Together with your adviser, we will inform them of the options and explain the consequences of their choices.
If your employee considers certainty about the amount of his or her pension important, ZekerheidZwitch would be a good choice. From 15 years before the retirement date, part of the value of plan assets will be sold every month. The proceeds are then used to purchase a pension. This pension is guaranteed and will be paid monthly after the retirement date. Your employee will get greater clarity and certainty about the amount of pension as the retirement date approaches. How much certainty depends on your employee's profile.
Some advantages and disadvantages of ZekerZwitch
The amount of the pension depends largely on the rates (interest is an important factor) at the time of purchase of the defined benefit. And on the average life expectancy at that time. Due to the the spread (monthly) pension purchases, your employees are less dependent on the interest rate on the retirement date. If interest rates fall, there will be more pension than if the pension is purchased in one go on the retirement date. If interest rates rise in the years before the retirement date, the pension could be lower when purchased through ZekerheidZwitch than if the pension would be purchased in one go on the retirement date. The same applies for the average life expectancy. If people live longer, spreading the purchase is more favourable. If the average life expectancy decreases, it may be better to wait until the retirement date before purchasing the pension. Interest rate developments and the average life expectancy may affect the amount of pension on the retirement date.
After the retirement date
Your employee will have several options to choose from on the retirement date. Buying a fully defined benefit immediately, for example. A variable pension (with reinvestments). A high-low pension. Or combinations of the above. At least six months before the retirement date, we will inform your employees about the different options.
If your employee opts for ProfielBeleggen with ZekerheidZwitch and dies before the retirement date, any guaranteed benefits purchased prior to the retirement date with a part of the value of plan assets will be cancelled. This means that the value of the plan assets at the time of the employee's death will be lower. This results in a lower partner's pension.