Do you have savings placed in PFA Traditional?
If your savings are placed in PFA Traditional, you should consider whether this is still the best solution for you. In PFA Traditional, your savings are invested in the average interest rate environment, which generates steady returns. The low level of interest rates and the increased amount of regulations mean lower returns, and therefore, it is a good idea to consider whether this is still the best solution for you or whether the market rate environment is a better option.
In PFA Traditional, you are ensured a minimum payout. If you switch to market rate in PFA Plus, the minimum payout lapses, and your future payouts will depend on the return on the financial markets.
In the market rate environment, the return follows the development on the financial markets, and the full return is added to your savings on an ongoing basis. This is not the case with the average interest rate environment. With average interest rate, the return is evened out over a number of years, which means that you receive a steady rate of interest in good as well as bad years, and you are always ensured a minimum payout.
"Of course, no one knows for certain how the financial markets will develop. That being said, PFA assesses that generating returns will generally be easier in the market rate environment than in the average interest rate environment, as market rate allows PFA greater investment freedom,” Carsten Holdum, PFA’s Consumer Economist and Customer Representative, says.
Your possibility of a transfer allowance
In the market rate environment, you are not ensured a minimum payout. This means that if you subsequently transfer your savings from PFA Traditional to PFA Plus, PFA is often able to grant a transfer allowance which has been calculated individually, to your savings plan. Together with your savings, the allowance makes up the total financial value of your pension savings at the time of the transfer.
The transfer allowance is a lump sum that will be transferred to your PFA Plus plan. You can see the size of your transfer allowance as well as transfer your savings at My PFA (mitpfa.dk). The transfer allowance is calculated by the end of each month based on the current market conditions etc. in accordance with the rules laid down by the Danish Financial Supervisory Authority.
If your savings are placed in PFA Traditional, you can see how to collect your savings at My PFA under Messages.