How to compare ways of saving for your pension

How to compare ways of saving for your pension

Anyone who invests in a pension savings fund does so for 20, 30 or sometimes even 40 years. So it's important to choose wisely.

It's difficult to predict how much income you will get from your savings when you reach retirement age. That depends on factors such as the return on the pension savings fund. Don't just look at the performance in the last few months. Even if your chosen fund doesn't manage to beat the average return each year, that's not necessarily a problem. After all, past performance is no guarantee of future results.

Comparing ways of saving for your pension means more than just comparing returns

It's not a good idea to base your decision on the return alone. Before you decide, you should also compare costs. There are two types of costs associated with a pension savings fund: entry charges and ongoing charges.

1. Entry charges

Every time you pay into the fund, you pay entry charges. This is a certain percentage that's deducted from your deposit before the money reaches the pension savings fund. Entry charges of 3% are standard for many pension savings funds. At KBC, however, they are 2%, meaning that more of the money you save actually goes into the fund. 

2. Ongoing charges

With a pension savings fund, you also pay ongoing charges. These are basically management and administration fees, expressed as an annualised percentage. They're not charged separately, but daily, as part of the price (also known as the net asset value). As a result, they mount up more than entry charges in the long term.

Tip when making comparisons: remember that pension savings funds not subject to entry charges are not charge-free. Management and administration fees are included in the daily price and can vary greatly depending on the fund concerned.

You don't normally have to pay exit charges unless you withdraw early. In that case, you pay a high amount of tax. If you need money, you should look for an alternative instead.

Considered switching to a KBC pension savings fund?

You can switch from a pension savings fund at another bank to a one at KBC easily and for free. All you need to do is get in touch with a KBC branch.

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