In addition to deciding what amount you want to pay into your pension as a self-employed person, you must also have decided which type of pension suits you.
If you simply put the money aside in a regular bank account, there is a good chance that it will lose value in line with inflation.
The vast majority therefore choose to invest their pension savings in e.g. shares, funds, securities or other through a pension scheme.
In this way, you can avoid inflation reducing the value of the savings over time and even achieve a return and thus increase the pension you will be paid in the future.
Mainly, a distinction is made between 3 different types of pension:
Installment pension is the most common pension savings. It is a private retirement savings account that will be paid out in installments (like a regular salary) when you choose to retire.
- Annuity (for life or termination):
A lifetime annuity pension is an insurance policy that gives you a continuous payout for the rest of your life – regardless of how long you live. If, on the other hand, it ceases, it is somewhat similar to the installment pension and is also paid out over a number of years.
If you would like to have your pension paid out in one lump sum, you should choose the retirement pension. Most often, people choose an old-age pension to supplement the installment pension savings if they want to pay more into the pension than the permitted limit for the installment pension.
Most therefore choose the installment pension, which is the most widespread pension savings.