Myth: Pensions are risky, I’d be better off saving for retirement myself

Every investment carries some level of risk. Having all your money on deposit or in cash means that you’re vulnerable to inflation reducing the real value of your money, meaning your money might not be worth as much in 10, 20 or 30 years’ time. In contrast, pension savings provide great tax benefits, compound investment growth and are more responsive to inflation.

If you’re intending to save for your pension yourself, it’s worth considering that in addition to the potential for inflation to erode the value of your savings, money on deposit may give you a predictable, low rate of interest. But with a pension, your savings are invested in an investment fund, which offers the potential for your pension savings to grow at a faster rate than what you might get from placing your regular savings on deposit*.

Pensions are a long-term savings vehicle, and the longer you save, the better. During that time, it is your pension provider’s investment strategy that works diligently away in the background, doing its level best to ensure the value of your pension grows.

Performance counts

When it comes to choosing a pension provider, look at their investment track record over time. While it is true that the value of investments can go down as well as up, and that past performance is not an indicator of future returns, knowing a pension provider’s track record should play a part in informed decision making.

Pension investments often span more than 30 years, so it can be reassuring to seek out a provider that has shown a consistent and robust investment strategy through all sorts of economic ups and downs, over the long term.

At Zurich we are active managers and that means we were able to react, make decisions and change what we were invested in. The value of your final pension pot is down to investment performance, and the earlier you start contributing the longer you’ll have that investment performance working for you.

At Zurich we have options for any risk appetite and can help you work out if you are risk averse, a risk taker – or just somewhere in between. We use our risk profiler tool to see the level of investment risk you are comfortable with and find an investment fund to suit you.

For a long-term product like a pension, having a team of investment managers that can do well in a variety of economic scenarios can make all the difference. With Zurich, it’s nice to know that there is someone actively looking after your money.

Pension planning

Pensions can be a smart way to prepare for your retirement. Take the next step, begin your pension journey and choose a pension that can give you the retirement you deserve. Get in touch with a Zurich financial advisor or find a local financial advisor near you with the Zurich Advisor Finder to talk about your options for starting a pension. With a wide range of options, control and flexibility, you can choose a pension plan that’s right for you.

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The information contained herein is based on Zurich Life’s understanding of current Revenue practice as at September 2024 and may change in the future.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice.

*Generally speaking, over the medium to long term, higher risk investments offer the potential for higher returns compared with lower risk investments. Over the period, the Prisma 4 fund has shown swings both up and down in price compared with the Bank Deposit/Building Society Account which shows straight line growth, but the investor has been rewarded for this risk through a higher return. The capital in a Bank Deposit/ Building Society/Post Office Account is normally secure.

Sources:

₁Investment Excellence Award, Brokers Ireland, 2014, 2015, 2016, 2017, 2018, 2019, 2021, 2022, 2023. No awards held in 2020. Pension Provider Excellence Award, Brokers Ireland, 2023, 2022. Fund Management Company of the Year 2023 Award, Business and Finance Financial Services Awards. Life Assurance and Pensions of the Year, InBUSINESS Recognition Awards, 2024.

₂Zurich, 30th June 2024.