Here’s some news that will cause a stir in the financial sector: Belgian fintech Easyvest announces that it will launch its own pension fund in October, the Easyvest Pension Fund. “It will be a multi-employer pension fund, unique in the Belgian financial landscape”specifies Easyvest, a company created in 2016 and mainly active in online investment.
“Good for the Belgian state, not for the employees’ wallets”
With this product, Easyvest attacks a market segment – the second pillar of employee pensions or supplementary pensions – dominated by group insurance contracts. “Today, 80% of the supplementary pension schemes for employees are group insurances. These contracts are mainly based on branch 21 products that guarantee capital but offer annual returns of around 2%, struggling to beat inflation, emphasizes Mathieu Remy, founder of Easyvest. And it is logical: these group insurances are mainly invested in European government bonds and primarily in the Belgian government, countries which are not really champions of growth. This therefore benefits the Belgian state, which finds it a good means of financing, but it is far less good for the employees’ wallets. And in a long-term context such as pension planning – with an investment horizon of up to 40 years – investing without risk is a financial aberration.”
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The rest of the supplementary pension market is occupied by pension funds, which take more risks in their positions, investing in particular in shares and “therefore generated more returns in the long term – 6.2% annual return over the last 40 years”, recognizes Easyvest. “However, due to their structural costs, pension funds were until now only reserved for very large companies, entire joint sectors and certain public institutions.emphasizes Easyvest.
What distribution?
Therefore, this product that the Belgian fintech is preparing to launch is intended for company directors and companies themselves: the Easyvest Pension Fund will be invested exclusively in stock or bond index funds (funds that replicate the returns of stock indices – S&P 500, Cac 40, etc. . – or bond indices Editor’s note). According to which distribution between stocks and bonds? “It is the customer who decides. We make recommendations based on age: at, for example, 25 years old, we suggest investing 90% in equity funds and 10% in bond funds. And as you get older, we gradually recommend increase the share of bond funds, to reach 50/50 towards the end of the career. explains Mathieu Remy. And in the future, we would like to see the legislation develop, and that the employee himself can completely decide how to invest.’.
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Easyvest’s ambitions are big in this supplementary pension segment: “Our ambition is in 10 years to convince 10,000 companies to join the Easyvest Pension Fund for the benefit of 100,000 Belgian employees, for a total of one billion euros in assets under management”she announces.
