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Choice of pension profile and mutual fund

The choices you make today can have a big impact on your future. It is therefore important to make the right investment choice for your pension.

Independent pension
  • Select the pension profile or mutual fund in which your pension will be invested

  • Your investment options depend on the type of pension account you have

Applies to the own pension account scheme which consists of a defined-contribution pension and a pension capital certificate.

What is a pension profile?

A pension profile can consist of different proportions of shares and fixed-income securities, and it is important that you choose what is best for you.

When choosing a pension profile, it’s important to evaluate the proportion of equities. You should think about how much risk you want to take, your expectation of return and how many years it is until you retire. If you still have many years left, you are less exposed to fluctuations in the market as the risk of a high proportion of equities is distributed over a longer period of time. Experience tells us that the market overall will rise in the long run. Historically, stocks have provided a better return than fixed income securities, but also higher risk. Note that historical returns are no guarantee of future returns.

Reduced risk towards retirement age

For those with a pension profile, the proportion of shares is automatically reduced every quarter as you approach retirement age. This is called down-weighting. The money is thus less exposed to fluctuations in the market.

If you have chosen a fund yourself, you get no automatic reduction of risk in your pension savings. If you want automatic down-weighting, you can change to a pension profile. Changing funds in your portfolio can also contribute to risk reduction.

Illustration of down-weighting pension

Illustration of down-weighting

Down-weighting

Down-weighting means reducing the risk in your savings as you approach retirement age. You start with a higher proportion of equities at a young age, and when you get older you get less shares and more fixed-income securities. This is how to avoid having too high a risk in your savings as you approach retirement age.

If you have switched off down-weighting on your pension profile, you can switch it back on at any time in the online bank and in The Spare app under:

  • Pension - Pension account/Pensjonskonto Flex
  • My investment options
  • Change down-weighting - Adjust down-weighting

Pensjonskonto Flex (Pension account Flex)

If you would like more investment opportunities, you can choose Pensjonskonto Flex. It gives you access to a wide selection of pension profiles and competitive mutual funds.

  • Read more about Pensjonskonto Flex

Sustainable investments

If you want to make sustainable choices, you can choose My Pension profile Green Shift. Here, your money is placed in mutual funds with an extra focus on sustainable investments.

How to reduce risk in pension savings?

Adult couple on the beach

1. Change to pension profile

If you want automatic down-weighting, you can change to a pension profile in the online bank and in the Spare app.

Growing plants

2. Change mutual funds

Changing mutual funds in your portfolio can contribute to risk reduction. With Pensjonskonto Flex, you can choose what is best for you from a wide selection of pension profiles and competitive mutual funds.

What should you think about when choosing a mutual fund?

When you are saving for a pension, you must think about how long it is until you have to withdraw your pension when choosing a mutual fund. Different types of mutual funds have different risks and recommended time horizons for saving.

There are three main types of mutual funds: equity funds, fixed-income funds and balanced funds. Which type of mutual fund is right for you depends, in particular, on the desired risk and time horizon. The longer you save, the greater the chances of getting a good return.

Equity fund is a mutual fund where at least 80 per cent of your money is invested in equities. The value of an equity fund will fluctuate, and we therefore recommend a savings period of at least six years.

Balanced fund is a combination of equity fund and fixed-income fund. The recommended savings period depends on which balanced fund you choose. Read more about the Active Funds.

Fixed-income fund is a mutual fund where your money is invested in fixed-income securities such as bonds and commercial papers. You can consider saving in fixed-income funds if you want a higher return than a bank account and have a savings horizon of 2 years or more.

Woman with laptop

Wondering how we manage our pension profiles?

Historical returns are no guarantee of future returns. Future returns will depend, among other things, on market developments, the skill of the Portfolio Manager, the mutual fund’s risk, and the management costs. Returns may be negative as a result of mark-to-market losses.

Pensions

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