Pension fund

A pension fund is an investment fund that is used specifically for retirement provision. Such funds are used in pillar 3a and in vested benefits. They are issued by fund companies and invest the pooled capital of several investors in a diversified portfolio of assets such as stocks and bonds.

Pure pension funds allow for the reimbursement of withholding tax on dividend payments. This is not the case with conventional investment funds, which are also available in free assets.

Pension funds offered by banks are comparatively expensive, with product costs of around one percent, and are in direct competition with increasingly popular digital pension solutions, such as pillar 3a apps. Instead of a single fund, providers such as True Wealth use a bundle of withholding tax-exempt index funds and ETFs to offer the most efficient investment option for the respective investment market. This results in product costs in the lower per mille range. In addition, digital providers do not charge issue and redemption commissions, and there are usually no long waiting periods for liquidation.