PFA Invests

In PFA Invests, you can select from three different investment profiles with different investment risks and return potentials. Additionally, you can select how the savings in the profile should be distributed between PFA’s regular savings solution, PFA Plus and PFA Climate Plus. In the latter, PFA have put extra focus on the climate and CO2 footprint.

 

PFA Invests

PFA Invests is a so-called market rate universe in which your return follows the development of PFA’s investments on the finance markets. You carry the risk yourself, and therefore at PFA, you also have influence over the balance between your investment risk and your expected return. The greater the risk you take, the higher the expected return during a positive trend in the financial markets, and the greater the expected loss during downturns.

In PFA Invests, you can choose between three investment profiles, and it applies to all the profiles that the risk will gradually be reduced as you approach retirement, and your need for security rises. Read more about gradual reduction of risk at the bottom.

Three investment profiles – is your profile the best match for you?

Profiles Low, Medium and High have different potentials for a positive return and involve different degrees risk. Profile Low comes with the lowest risk and the lowest potential for a high return. Profile High has the greatest possibility of a high return – but also the highest risk.

The investment profiles are based on PFA’s Low risk funds and PFA’s High risk funds, that invests in e.g. shares, bonds, property and alternative investments. The higher the investment risk of the profile, the greater the share of investments comes from the High risk fund.

Log on to My PFA to view your investment profile. Your options depend on the agreement that you and your employer or organisation have with PFA. At My PFA, you can view your options, and you can go through the Investment Guide and get help to make your investment selection.

 

 

Profile Low

Approximately 60 per cent of your savings are invested in the High-risk fund while approximately 40 per cent in the Low-risk fund.

The distribution indicates the risk in the profile before gradual reduction of risk, which begins 14 years before retirement. At retirement, the investments in the High Risk fund are gradually reduced to approximately 30 per cent. Hereafter, the proportion will be reduced by approximately 1 percentage point per year and be approximately 10 per cent 20 years after retirement. The percentage will not fall below approximately 10 per cent.

With profile Low, you have the possibility of linking payout protection cover to your plan, and with that reduce the investment risk further. This, we do not usually recommend, as it will worsen your return potential.

 

Profile Medium

Approximately 95 per cent of the savings are invested in the High-risk fund while approximately 5 per cent in the Low-risk fund.

The distribution indicates the risk in the profile before gradual reduction of risk, which begins 18 years before retirement. At retirement, the investments in the High Risk fund are gradually reduced to approximately 45 per cent. After that, it will be reduced by approximately 1 percentage point per year and be approximately 20 per cent 25 years after retirement. The percentage will not fall below approximately 20 per cent.

 

Profile High

100 % of the savings will be invested in the High-Risk Fund.

The distribution indicates the risk in the profile before gradual reduction of risk, which begins 12 years before retirement. At retirement, the investments in the High Risk fund are gradually reduced to approximately 60 per cent. After that, it will be reduced by approximately 1 percentage point per year and be approximately 30 per cent 30 years after retirement. The percentage will not fall below approximately 30 per cent.

View the return for the three investment profiles

 

If you have Profile Cautious, you can read more here

PFA recommends Profile Medium

 When it comes to risk appetite, everyone has their own preferences. Your choice of investment profile impacts your pension savings and with that your future, and therefore the ratio between risk and return should be just right for you.

Generally, we recommend that our pension customers choose Profile Medium, as it is our assessment that for the clear majority of our customers, this profile has the most appropriate balance between risk and return.

That said, we know, that the choice of profile is a question of personal temperament and that it among other things depends on your financial situation and total long-term savings. Therefore, Profile Low may be a better option for you who have less risk tolerance. Meanwhile, Profile High may be the perfect match if you prefer to invest your savings with the potential of a higher return. However, also with the higher risk of loss.

Get an immediate recommendation
Listen to investment specialist, Carsten Trier, explain more about PFA Invests

Low, Medium or High. Which profile is the best match for you? You can quickly find out by answering a few simple questions at My PFA about your return expectations and your risk appetite. All you need to do is log on to My PFA and find the guide under Investments.

Try the Investment Guide

PFA Climate Plus – an option that further the green transition

With PFA Climate Plus, you can place your pension savings in investments that help further the green transition by being focused on a low CO2 footprint, investments in assets that support the green transition, as well as active ownership. This is by selecting investment profile in PFA Plus and thereafter you select a part of PFA Climate Plus.

With PFA Climate Plus, you invest your pension savings based on three climate criteria:
 

Increased focus on CO2

The PFA Climate Plus equity portfolio must emit 60 % less CO2 than the world equity index measured across the full value chain1.

Exclusion of oil, coal and gas

Oil, coal and gas companies are excluded i.a. by following the exclusion criteria of the EU Paris-Aligned Benchmark (PAB) in the equity portfolio2.

Carbon-neutrality in 20253

The ambition is for the investments in PFA Climate Plus to be carbon-neutral by the end of 2025 and carbon-negative4 by the end of 2030 measured by scopes 1 and 2

 
Please note that investments that support a low carbon footprint are not necessarily sustainable in themselves.

  
1MSCI All Countries World Index, CO2 is measured using scopes 1, 2 and 3.
2Defined by Article 12 “Exclusions for EU Paris-aligned Benchmarks”, COMMISSION DELEGATED REGULATION (EU) 2020/1818 of 17 July 2020.
3The ambition is to be achieved by investing in forestry and technology that capture CO2 from the atmosphere.
4Carbon-negative means that the underlying investments remove more CO2 from the atmosphere than they emit.

Read more about PFA Climate Plus

Gradual reduction of risk

Irrespective of the investment profile you have selected, your investment risk will gradually be reduced as you approach retirement. This is to reduce the risk of big drops in the savings at the end of the savings period, where the need for security rises and you have limited time to recover possible losses. The gradual reduction will continue after your retirement. Here, you can read about how the gradual reduction occur in the different profiles.

Integrated gradual reduction of risk in all profiles

The greater the potential for returns, the greater the potential for losses.

The closer you are to your retirement age, the harder it becomes to make up for potential losses. Therefore, the investments with the highest risk will be gradually reduced as you approach retirement – the closer you get to retirement, the lesser risk will be involved when we make investments on your behalf.

The relationship between risk and return

Investment returns vary from year to year, and both shares and bonds may yield negative returns. There is often a connection between risk and return. The greater the risk you are willing to take, the greater the potential for obtaining a high return. Typically, shares generate higher returns than bonds. However, shares also have the greatest fluctuations, and therefore the highest risk as well.

When your pension payout is in process

When your pension payout is in process, your savings will still be invested in market rate – and in the same investment profile and the gradual reduction of risk will resume.

Having your savings placed in the market rate environment means that your pension may increase or decrease. When your payouts are about to start, we will, as a rule, fix your monthly payout until the end of the year. Hereafter, your pension payouts will generally be adjusted once a year with effect from January in the new year.

The pension payments will be fixed based on the size of your savings and our principles of payout in force at any time, which among other things include assumptions on expected return (payout rate). If the actual return of the year turns out higher or lower than assumed, the payouts may increase or decrease. Payout of life pension also includes the assumptions of remaining life expectancies, which may be subject to regular changes.

However, it is not only the return and the development in life expectancy that affect fluctuations in the pension payments. This also applies to costs, taxes, etc. If we change our principles of payout, including the payout rate, this may also impact the size of the benefits.

Payout protection cover

Pension customers at PFA Invests who have selected Profile Low can link the product payout protection cover.

Payout protection cover on your savings plan ensures that, as a rule, your pension payouts will not drop below a certain level. If you have selected payout protection cover, we generally phase the cover onto your savings during the last ten years prior to your expected retirement. This is done by gradually placing a part of your savings into specific funds with very low risk, these are called duration funds.

From the point in time when we start phasing in payout protection cover on your savings plan, you can keep track of how large a part of your savings that is placed in duration funds. Additionally, you can keep track of the provisional secured level of your payments. The special duration funds that are applied for payout protection cover are, under normal market conditions, expected to generate a lower return than the High-risk fund and Low-risk fund, which are the funds on which your savings without payout security are distributed. This means that your pension payouts will usually be expected to be lower if you have a plan with payout protection cover. In some cases, even considerably lower.

Please note that payout protection cover may lapse or change in certain situations. You can read more about this in the Terms and Conditions of your Pension.

Find out whether you can select payout protection cover



 

Environmentally sustainable investments
The investments underlying this financial product (payout protection cover) do not consider the EU criteria for environmentally sustainable economic activities.

Categorisation in accordance with the EU regulation on sustainability-related disclosures
The investments underlying the payout protection cover do not aim to further environmental or social characteristics and do not have sustainability as their objective, according to article 6 of the EU regulation on sustainability-related disclosures (SFDR).