Why ETFs are suitable for retirement planning

Building a pension is an increasing concern for many Belgians. Ageing, pressure on the statutory pension, and uncertainty about future government measures force us to start working today on our income for tomorrow. But what is the best way to save for a comfortable retirement? And how do you combine return with safety and transparency?

The Belgian pension system under the microscope

Belgium has a four-pillar pension structure. Still, the statutory pension is insufficient for most citizens to maintain their standard of living during retirement. As a result, more and more Belgians are taking matters into their own hands and are independently building up their pension. ETFs can be a powerful tool in doing so.

- The four pillars of the pension

1. First pillar: the statutory pension based on your professional career. This amounts to an average of €1,400 gross per month for employees.
2. Second pillar: the supplementary pension via the employer, through group insurance or pension funds.
3. Third pillar: tax-advantaged individual pension savings or long-term savings, with an annual tax benefit.
4. Fourth pillar: voluntary saving or investing with your own funds, without tax advantages but with full flexibility and control.

- The necessity of a fourth pillar

With rising life expectancy and an unsustainable ratio between active workers and retirees, the first pillar is under increasing pressure. The second and third pillars are limited in volume. Anyone who wants a comfortable pension must therefore save independently. ETFs offer an efficient way to build that fourth pillar.

What are ETFs and why are they interesting?

- Definition of an ETF

An ETF (Exchange Traded Fund), also called a tracker, is a stock exchange-listed fund that follows the performance of an underlying index. Think, for example, of the MSCI World Index, which consists of more than 1,500 companies worldwide. When you buy an ETF, you automatically invest in a basket of companies instead of a single stock.

- Advantages of ETFs

• Low costs: the annual management costs of ETFs are often less than 0.30%, compared to an average of 1.5% to 2% for actively managed funds.
• Broad diversification: a single ETF can contain hundreds or even thousands of stocks, significantly reducing risk.
• Transparency: the composition of an ETF is public and easy to track.
• Liquidity: ETFs are tradable like a regular share during stock exchange hours.

Also read: “ETFs: Everything You Need to Know to Invest Better”

Is an ETF good for your pension?

- Long investment horizon as an advantage

For retirement savings, you typically invest over a term of 20 to 40 years. Thanks to this long horizon, you as an investor enjoy two major advantages:

• Market fluctuations are smoothed out: temporary declines are usually compensated over the long term.
• Compound interest: (interest on interest) works in your favor.

Did you know that a one-time investment of 100.000€ at an average annual return of 6% can grow to almost 575.000€ over 30 years? That is the power of compound interest.

- Diversification and stability

ETFs offer automatic diversification, which reduces risk. This means you are less likely to be hit hard by a poorly performing stock or sector. By investing in global indices, you diversify across continents, sectors, and currencies.

Can I save for retirement using ETFs in Belgium?

- What is legally possible?

In Belgium, you cannot use ETFs within the tax-advantaged pension savings system (third pillar). This is legally limited to funds approved by the government. ETFs are therefore not eligible.
But: you can freely invest in ETFs via the fourth pillar, without fiscal restrictions or advantages. This provides flexibility to optimally align your pension with your profile and objectives.

- How do you start saving for retirement with ETFs?

1. Open an investment account with a regulated provider such as Easyvest.
2. Choose the right ETFs according to your risk profile (defensive, neutral, dynamic).
3. Start with periodic investing.
4. Stay on track and review your strategy every few years.

- Why traditional pension savings might cost you returns

In Belgium, pension savings via the third pillar are fiscally attractive, but returns are often limited by legal and structural restrictions. For example, a pension savings fund may invest a maximum of 75% in shares, of which only 20% outside Europe. These rules are intended to limit risk, but they also suppress potential long-term returns — precisely what is essential when building a pension.

Moreover, the costs in traditional pension savings funds are not negligible: entry fees of 2 to 3% and annual management costs averaging 1.2%. As a result, the net return often remains below that of global stock markets.

Over the past 10 years, Belgian pension savings funds yielded an average return of 8% per year, while the MSCI World Index recorded more than 10%.
Anyone who wants to optimize their pension build-up can therefore consider using ETFs within the fourth pillar, in addition to tax-advantaged pension savings. These offer lower costs, broader diversification, and better control over your strategy.

The role of Easyvest in your pension planning

- Easyvest’s approach with ETFs

Easyvest offers an automated and diversified investment path based on ETFs. We only choose broad and high-performing index funds, tailored to your investment horizon and risk profile.

- Advantages of investing with Easyvest

• Low costs: management fees starting from 0.5% per year
• Global diversification: via ETFs in stocks and bonds
• Advice and simulation: tailored to your pension plan

- Start your pension savings plan today

Do you want to know how much you need to save to live comfortably after your retirement?
Start a simulation on our website today or schedule a meeting with an advisor for a personalized approach.

Conclusion: ETFs as a lever for a comfortable retirement income

ETFs offer you all the assets for an effective pension strategy:

• Low costs that maximize returns
• Broad diversification that reduces risks
• Simplicity and transparency that build trust
• Full control within the fourth pension pillar

Do you not want to be dependent on an uncertain statutory pension?
Easyvest helps you with a clear strategy, so you can approach your retirement with peace of mind.