31 March 2016
Saving for your pension: which solution should you choose?
Will your statutory pension be sufficient to maintain your standard of living? If not, now is the time to start saving. You have a number of options, including pension savings funds, pension savings insurance and long-term savings. The best solution for you depends on your personal circumstances and your goals.
- Do you want maximum protection for your capital? Pension savings insurance or long-term savings may be right for you: the capital is protected and the return is guaranteed.
- If you have your eyes set on a higher return and you are prepared to take more risks to achieve it, a pension savings plan maybe something for you. The returns are typically much higher than a pension savings insurance. In many cases, legislation provides for several mechanisms designed to limit you capital risk.
- Are you currently paying back a mortgage? Then you should opt for either a pension savings fund or pension savings insurance. In so doing, you will be able to benefit from a tax advantage on both your home loan and your pension savings. The combination of home loan and long-term savings is less advantageous, because in that case, you will only receive a tax incentive for your home loan.
- In the case of long-term savings, you can deposit higher amounts each year and thus potentially save even more in tax. This tax reduction is not applicable if you already have a mortgage.