January 21, 2010 10:01:44 PM CET
gmanka (Jan 21 2010, 02:09 PM) said: > original post
I'm starting an eenmanszaak, and I want to know what the difference is between setting-up a pension fund (through an intermediary agent), and investing my money myself? In other words, why pay a lot of fees for someone to do the same thing as I could.
- If you save for your own pension, you're going to assume that you'll live to a ripe old age. A pension fund has enough customers that they can simply look at the actuary tables and assume that not all of their clients will live to be 108, and that a small number of them will never collect on their pensions at all. This makes the overall costs lower.
- A pension fund or insurer won't let you touch your money (or only at a severe penalty) until you actually retire. This means you won't be tempted to deplete your pension savings when times are tough.
- Pension funds and insurers employ professional investors who may be better at it than you are. They have much lower transaction costs because they can trade in large volumes.
That's the theory. In practice, the Dutch financial services sector has developed a reputation for being opaque about costs and risks, charging disproportionately high 'management fees', or, in the case of Dutch insurance agent Aegon, investing a substantial part of their clients' money in lucrative American sub-prime mortgages.
If you do shake hands with them, make sure to check if you're still wearing your wedding ring afterwards.