Comparing the two variantsAt DSM, we implement a net pension scheme with a DC-scheme, in which participants can save. The saved capital can be converted into a fixed annuity ten years ahead of the retirement date. Now it is also possible to use that capital to purchase a variable retirement benefit. Our question was: does such a variable retirement benefit result in a lot of added value for the participant, compared to the fixed allowance that he or she could already buy from us?
Added value of variable retirement benefit
General investigations, including by Ortec Finance, showed that the variable retirement benefit certainly has added value compared to the fixed pension that is implemented by an insurer. But even a fixed payment by a pension fund is actually not a fixed annuity, because it can be both indexed and cut. Nor is it invested risk-free in the benefit phase. Together with Ortec Finance, we have tried to objectively compare the two variants, i.e. the Pension Fund variant and the variable retirement benefit, for the net pension arrangement with the specific composition and financial position of DSM, and to see where the added value lies.