The complete guide: how your pension works
A pension is a long-term savings plan built from monthly contributions, invested in the capital market and converted into a monthly pension at retirement age. This page explains how the pension mechanism works, how the money grows over the years, who manages it and which decisions are in your hands.
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Pension savingsA general term for long-term savings products (pension fund, managers’ insurance, or provident fund) intended for retirement. are the main mechanism designed to provide you with a stable monthly income when you stop working. They are a financial marathon based on regular monthly contributions throughout your working years.
The contributions are made by you and your employer, or by you alone if you are self-employed, and are managed by a professional pensionA monthly payment made to a person after retirement from work in order to help maintain their standard of living. provider.
How a pension works in practice
The pension mechanism follows a simple formula:
- 1. Contribution
- Money is deposited into your pension savings every month—by you and your employer, or by you alone if you are self-employed.
- 2. Investment
- The money is not kept in a “safe.” It is invested in the capital market—shares, and real estate—to generate returns over time.
