The risks of pension saving

What are the risks associated with investing through a pension savings fund?

As with any investment, there are risks associated with retirement savings through a pension savings fund. We can distinguish the following risks that can have a negative impact on the overall performance of your pension savings fund:

• Return and capital risk: you do not get any guarantee of a certain return nor of your invested capital. In other words, the value of your investment can go up, but it can also go down. Even to the extent that in the event of a forced sale, you would be left with less than what you invested.
• Credit risk: this risk relates to an issuer and its ability to meet its commitments.
• Equity market risk: the pension savings fund also invests in equities and these are exposed to price fluctuations.
• Foreign exchange risk: for assets in the pension savings fund's portfolio quoted in a European currency other than the euro.
• Liquidity risk: when there are insufficient buyers, some assets might not be able to be sold within a reasonable time at a correct value.
• Inflation risk: this is the risk that your short-term returns do not move at the same rate as inflation, resulting in a loss of your purchasing power as an investor.