We live in challenging times; prices are rising and investment markets are not immediately positive either. You may not be directly concerned with this as far as your retirement is concerned. However, especially if you are close to retirement, it may still raise questions. We are happy to provide some explanations. <\/p>\n
Due to rising prices, we all suffer loss of purchasing power: We can buy less with the same amount of income. To counteract this, the board decides annually to what extent a supplement to DB pensions is possible. We look at inflation for the previous 12 months (i.e., from September 2021 through September 2022). The board also takes into account SPIN’s financial position and general economic developments when awarding. As you have come to expect from us, you will hear in January whether – and how much – supplement you will receive on your pension. <\/p>\n
Different mechanisms apply to DC capitals. In recent months, interest rates have risen sharply. At the same time, global stock prices have also fallen. That combination has reduced the value of DC investment portfolios in recent months. We design our investments to stabilize expected retirement income as much as possible. To reduce the risk of a lower pension from your DC capital, we invest more in bonds than in equities just before the retirement date. <\/p>\n
Here’s the thing: The decline in the value of investments is only one side of the equation. While rising interest rates reduce the value of your bond investments, they actually increase the amount of pension you receive from an insurer. This is because the value of your investments depends in part on those interest rates. The higher the interest rate, the higher the pension income per euro of capital. When interest rates fall (as we have seen in recent years), the exact opposite happens. <\/p>\n
On balance, our objective is that through this combination we ensure that just before your retirement date, your expected retirement income from the DC capital, even with interest rate movements, remains as stable as possible. These mechanisms exist only in the DC pension plan. <\/p>\n
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