The amount of your pension is not fixed. This is caused by the following uncertainties:
- On average, people live longer than before. This means that Forward has to pay the pension for a longer period of time.
- A low interest rate makes pension more expensive. This means that Forward needs more money to pay you the same pension.
- Results on the stock markets could fall short of expectations.
Information about our financial situation (policy coverage ratio) can be found here.
Below we explain how these (uncertain) factors influence our pension fund and therefore also your pension.
- On average people live much longer
The increase in life expectancy is bigger than we had anticipated. If the members’ average lifespan is increasing, their pension must be paid out longer. Forward then needs more money than was first anticipated.
- Low interest rate
The interest rate influences the value of pensions. Pension providers prepare a forecast in advance of the funds they require to be able to pay the pensions. The lower the interest rate, the more funds Forward needs to have available to be able to pay all the pensions. If the interest rate remains low over a long period of time, it therefore makes the pensions more expensive. This means that Forward requires more money to be able to pay out the same pension.
- Disappointing investment returns
The results of the investments could fall short of expectations. That is why Forward makes sure that the investments are spread over various investment categories. Profit on one investment can compensate for a loss on another investment. A pension provider can also cover investment risks, but there are costs attached to this.
Because of these uncertain factors you run risks, which are mentioned in this