Self-employed professionals and pension through bank investments

As a self-employed professional you are entitled to a government pension on your pension date; the AOW (state pension). If you wish to have a higher pension as a self-employed professional, you will have to built-up the so-called third pillar yourself.

As a self-employed professional you can arrange your own pension through an annuity insurance, but this quite pricy. Because of the pressure caused by the usury policy affair parliament has approved a new form; bank savings, from 2008. While the annuity insurance is offered by insurers, bank saving could also be offered by banks. More suppliers should lead to lower costs for investments, management and administration.

In 2015 there are three suppliers that focus on self-employed professionals. Because there are 880.000 self-employed professionals in 2014 – nearly double the number in respect to 2000 – the self-employed professional is an interesting market for pension insurers. In 2015 three suppliers have reported for pensions specifically aimed at self-employed professionals. This concerns the products of Brand New Day, Bright pension and ZZP pension of Loyalis/APG.

Specifically for self-employed professionals

The three suppliers on itself are doing nothing special. They all offer a bank saving product, although it isn’t saving but investing. The costs of these products have become lower than other bank (investment) products. The differences between the three suppliers are small, both in the cost structure as the investment system (passive Lifecycle model) and final model.

What supplier suits you the best?

This is a good question that is hard to answer. Most important is to look at the expenses, investments and flexibility of each supplier. Below is an attempt to answer these questions.

The cost of the supplier

In our view the management costs is the most important expense factor and also the annual service costs. The management expenses are calculated over the invested wealth and are 0.25% to 0.35% a year. The management costs are lowest for Brand New Day and Bright pension and ZZP pension the highest. The service expenses of Bright pension are highest with €210 and Brand New Day and ZZP pension lower (respectively €50 and €35). Research has shown that Brand New Day is the cheapest supplier. Only with a really high pension wealth (1.7milion and more) is Bright Pension the cheapest.

When is a supplier a good supplier?

We believe the main concerns are service, transparency and flexibility. The last one is the most important. And to be specific; the possibility to transfer the built-up wealth to a different supplier that will take care of the benefit pay-out phase. Good news! Because all three supplier offer this option.

The costs for the investment fund in the built-up phase

Bright pension desires to invest as durable as possible. The TER (Total Expense Ratio: costs made by the investment fund) of these funds will be between 0.3% up to 0.4%. The TER of Brand New Day starts at 0.59% and exceeds up to 0.75% The TER with ZZP pension is not known at this time (may 2015). Check the TER yourself on the website of the ZZP pension.

Conclusion

The information with the ZZP pension is incomplete at this time. But based on the costs of the supplier itself, Brand New Day is the best option, but if you include the TER, it looks like Bright pension is the best choice.

Supplier work on an execution only basis. So now advice is given. They seem like simple products, but that isn’t the case. Considering the intention of long term investment and the goal of pension built-up it concerns a lot of money and small percentages in management costs can make quite a difference in the long run. Just like when you buy a car or washing machine, you will let yourself be advised properly and thoroughly before purchase. Only then can you make the choice that suits you best.

If you need help in formulating a proper question or in receiving an answer. Please feel free to contact us through info [at] lupacompany.com or info [at] lexlupa.com.

Sources:

Financieel Dagblad 13th of May, 28th of February 2015 and an article written by Erica Verdegaal of the 6th of December 2014. ‘een ZZP’er die pensioen wil moet kiezen.’
Wet inkomstenbelasting 2001, wet van 20 december 2007. De websites van Wikipedia  en CBS over de invoering van het banksparen en aantallen ZZP’ers.
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