FSMA chairman Jean-Paul Servais. — © belga
The financial watchdog FSMA has developed an online instrument with which you can check the impact of the costs associated with a pension product on the final pension capital. “Recurring costs of 1 percent can make an average difference of 20 percent in the final capital over a longer period.”
The tool should help people who want to enter into a contract to build up an additional pension to make a well-considered choice. There are many different types of products (investment funds, pension savings funds, insurance products, etc.), and there are also different costs, such as entry costs (one-off costs for each investment) and ongoing costs (which recur annually). Its impact on the final amount depends, among other things, on the term.
The tool is not yet a real comparison instrument, where the products of different financial institutions are compared. Based on a number of parameters, such as costs, expected return and term, users can determine what pension capital they can build up and what impact variations in those parameters have on the final capital. It remains a theoretical exercise, because in many cases returns are unknown.
“World first”
FSMA chairman Jean-Paul Servais called on consumers to compare and take initiative, “because there is a lot of information available”. Negotiating can also be worthwhile, because many institutions work with price ranges. “In some cases it is possible to reduce entry costs by half.”
The cost tool – “a world first”, says Servais – is an outgrowth of a study that the FSMA carried out on behalf of the federal government. The costs of pension products from the second pillar (via employers and for the self-employed) and the third pillar (individual accrual of additional pension) were mapped out.
