When we started looking into Belgian pension saving funds, we were shocked. The difference between the best and worst performing funds was staggering. Over 20 years, the top fund returned 6% annually, while others barely beat inflation.
If you're like us, you probably chose your pension saving fund without much thought. Maybe you just went with what your bank offered. But that decision could cost you thousands of euros in retirement savings.
So, which pension saving fund is actually the best? And how does yours measure up? Let's dive in.
The best Belgian pension saving funds
What is the best pension saving fund?
In terms of return, the Argenta Pension Fund has been the best performing fund, returning an average 6.0% per year over the last 20 years. It also lacks entry fees, a significant advantage compared to the other funds that charge up to 3%.
What is a pension saving fund?
Pension saving funds in Belgium are a popular voluntary retirement savings option, falling under the 3rd pillar of the country's pension system. These funds allow individuals to set aside additional money for retirement, supplementing their state pension while enjoying significant tax benefits. Typically, contributors can receive a tax break of 25% or 30% on their savings, depending on the amount invested. The government sets an annual maximum contribution limit, which stands at 1,310€ for 2024. This combination of additional savings and tax advantages makes pension saving funds an attractive option for many Belgians looking to secure their financial future.
How do I choose a pension saving fund?
There are several criteria that are important:
- Return
- Entry fees
- Risk profile
Return
The return is the most important criteria in our eyes. A higher return means a higher pension for you.
Entry fees
The entry fee is the fee you pay every time you contribute. If a fund has an entry fee of 3.0% and you contribute €1,000, the bank or fund provider will pocket €30 and only €970 will go into the fund for you.
Risk profile
The risk profile of a fund is associated with its investment strategy. A fund that aims for a higher return will typically invest more in "riskier" assets like stocks. In this case, the risk is not so much losing your money, but rather exhibiting higher fluctuations.
If you're young, you can afford to take more risk when saving for your pension. This way, you are expected to end up with a higher pension than investing in a safer fund. This is even more so for pension saving, as your money is locked until the age of 60 (unless you pay a 30% penalty to take it out earlier, which we don't recommend).
Conclusion
Choosing the right pension saving fund is crucial for securing your financial future. While the Argenta Pension Fund has shown impressive returns and no entry fees, it's essential to consider your personal risk tolerance and investment horizon. Remember, past performance doesn't guarantee future results. As you plan for retirement, consider diversifying your investments beyond pension saving funds. Explore other options like index funds or ETFs, which can offer broader market exposure and potentially higher returns. Whatever you choose, start saving early and consistently to make the most of compound interest.
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