How we select pension funds
Busnelli & Associati also assists the client during retirement planning, in particular in the selection of the most appropriate pension fund for the client.
The pension fund is an instrument of long-term savings whose purpose is pension integration. Given the recent pension policies and the demographic trends in our country, it is very likely that in the coming years the public pension alone will not be sufficient to ensure a satisfactory standard of living. Pension funds make it possible to bridge the inevitable gap between the public pension and the last income received.
Depending on one’s professional category (private and public employees, self-employed and freelancers) but also if one is not a worker, including students and tax dependent persons (minors and not), there is a more appropriate category of pension fund.
Pension funds are divided into three different categories: open pension funds, PIP – individual pension plans and closed pension funds.
Regardless of the category of pension fund, the choice to join pension funds for supplementary retirement is always free. The subscriber can freely choose the amount and frequency of the contribution on the basis of his objectives and economic availability. In addition, contributions can be suspended and resumed at any time. In addition to voluntary contributions, workers can choose to pay their accruing severance pay into the pension funds and in some cases the employer can contribute an additional portion.
The supplementary pension system envisages that once the employee has reached retirement age the amount accumulated will be paid out in the form of a supplementary pension to be placed alongside the public pension. The value of your supplementary pension will depend on the fund’s performance in investing in the financial markets. Each pension fund offers different management compartments, each differentiated by degree of risk depending on the financial instruments in which it invests.
Typically, each pension fund is divided into four different types of compartments:
- the equity sub-fund, which invests mainly in equity securities
- the balanced sub-fund, which invests partly in equities and partly in bonds
- the bond sub-fund, which invests mainly in bonds and government securities
- the guaranteed sub-fund which guarantees the repayment of the paid-up capital
In order to choose the most appropriate sub-fund, Busnelli & Associati assesses the time horizon available to the client and the client’s propensity for risk.
Once the category of pension fund and the management compartment most appropriate for the client have been identified, Busnelli & Associati chooses the bank or insurance company which offers the best pension fund.
The supplementary pension market is very vast. For this reason a method is necessary to be able to select the best funds.
Busnelli & Associati to identify the best pension funds implements an analysis of management costs, returns and in particular the volatility of the latter. Over time, costs can erode pension savings and it is for this reason that it is important to select the most efficient fund. While returns and their volatility are not indicative of future returns, past performance is a good indicator of the manager’s skill.
Thanks to its selection method, Busnelli & Associati is able to select the pension fund that best suits the client’s needs and has the best risk-return ratio.