Retirement provision is an important part of our financial planning. It is not only about securing the standard of living after retirement, but also about protection in the event of disability and premature death. The pension fund plays a decisive role in this. Christian Fuchs, Head of Pensions and Deputy Managing Director of Profond, discusses in his recently published article in ORGANISATOR, magazine for SMEs, how survivors can be better protected financially by separating savings and risk.

Disability and death benefits

Financial protection in the event of disability and death is provided by additional risk contributions paid by the employer and the insured person. In the event of death before retirement, survivors benefit from a pension or lump-sum payments. But what happens to the individual retirement assets and additional purchases made by an insured person?

Arrangements in the event of death

The regulations in the event of death vary depending on the pension fund. The individual retirement assets of a deceased person can either be paid out to the survivors as a one-time lump-sum payment or used to finance the spouse's or partner's pension. Often the retirement assets are not sufficient to finance the entire pension benefit and the difference is covered by the collective pot of risk contributions.

The solution: separation of savings and risk

One solution to avoid the loss of purchases made is to separate savings and risk. With this method, the entire individual retirement assets are paid out to the survivors in addition to the spouse's and partner's pension. In this way, no amount paid in by the deceased person before his or her death is lost.

Why is this important?

It is important that we are clear about our pension provision. What happens to our savings contributions and purchases if we suddenly pass away? Asking and answering these questions can provide us and our family with the financial security we need.

Conclusion

Our pension fund plays a crucial role in providing financial security in the event of death. In this regard, separating savings from risk offers a way to provide better financial security for survivors.

Read the full article here (German) for more information.