How to Increase Your Pension If It's Too Low

To increase a pension that's too low, you must first think about it in advance, using simulation services that allow you to estimate the amount of your future public pension.

Once an estimate is obtained, it will be easier to plan savings and investments to ensure an additional income that allows you to maintain your standard of living even in old age.

In this article, we will explain that there are many possibilities to increase a pension if it's too low, and why complementary pension schemes offer enormous advantages compared to all other alternatives.

How to know your future pension?

The first step to understanding how to behave regarding the future pension is to have a full awareness of what the future amount of the pension check will be.

INPS is well aware that the reforms that have followed over the years have thinned the check. For this reason, it has prepared a simulation service called My INPS Pension, through which it is possible to estimate what (presumably) the pension will be at the end of your working career.

In particular, with this service you can:

• verify that the contribution situation corresponds to the work activities carried out over time, and possibly report any anomalies found to INPS;
• estimate the moment when you can access the old-age pension;
• estimate the amount of the pension check you will receive upon retirement.

This last information is essential to understand future cash flows and the amounts necessary to integrate them in case the pension is too low.

Also read our in-depth article What is the difference between contributory and salary-based pension

Where to invest to supplement the future pension

Taking action well before reaching retirement age is, as we have seen, really important.

Only with the benefit of a adequate time horizon - that is, a period of time sufficient to set aside money and invest it - can you achieve an optimal integration of the pension check.

In this way, you can avoid a sudden collapse of your standard of living in the transition from working life to retirement.

Let's see, therefore, some types of investments that you could consider for the future.

1. Real Estate

Purchasing one or more properties to rent out, in order to generate a monthly income, is one of the most widespread choices among Italians.

This solution, however, has a series of disadvantages, in particular:

1. management of tenants and payments;
2. taxes to be paid, even in the event that tenants are defaulting;
3. possible tenant default, therefore liquidity not entirely guaranteed;
4. difficulties in reselling the property quickly, if the location is not particularly sought after or due to the economic situation of the moment.

2. Financial Markets

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3. Luxury Goods

The expression luxury goods refers to so-called “alternative investments”, such as fine wines, paintings, furnishings, and everything that revolves around, indeed, luxury.

Also in this case, as with financial markets, there are two options:

• become great experts in the sector in which to invest, so as to recognize, for example, the “duds”, that is, paintings that have no value, if we are talking about art;
• make use of specialized and expensive consultants.

Finally, there is the solution specifically designed to supplement the pension check and that, as we will see, has a series of unbeatable advantages over the others: the complementary pension.

Let's explore this very valid option together.

Joining a pension fund is the best choice

Complementary pension schemes in general, and negotiated pension funds like Priamo Fund in particular, represent the most convenient solution to the problem of a pension that's too low that should be increased.

Let's see, in summary, the main advantages deriving from joining the pension fund.

1. TFR

For employees there is the possibility to allocate the Severance Pay to the negotiated pension fund, in order to guarantee an automatic annual set-aside that does not affect the present, since the TFR is in any case not paid monthly to the worker, but liquidated at the end of the working relationship.

2. Employer Contribution

Those who join a negotiated fund like Priamo Fund can decide to add a personal contribution to the TFR allocation.

In this case, they can count on a further contribution from the employer, thus significantly increasing the total annual set-aside, which thanks to the capitalization of returns ensures greater supplementary income.

3. Favorable Tax Treatment

The Italian State reserves a series of tax advantages to the sums invested in pension funds:

• in the contribution phase, with a deduction in the income tax return;
• in the management phase, with reduced taxes on returns compared to any other form of investment;
• in the performance phase, with a rate on the supplementary pension that can reach 9%.

4. Flexibility (amounts, risk, and time horizon)

Priamo Fund is characterized by a notable flexibility recognized to members.

In particular, it guarantees freedom of choice regarding:

• the amounts to be allocated to the Fund, since you can decide the measure of the periodic contribution and modify it over time according to your liquidity needs;
• the sums to be divested in case of need, through redemptions and advances;
• the investment lines to select based on your risk propensity;
• the compartments to select based on the time available.

5. Investment Protection

The regulatory framework of reference for complementary pensions guarantees a significant level of protection of the set-aside and invested money, so as to allow members to live their choice with maximum serenity.

5. Contained Costs

Here are some tips on how to protect your savings from inflation: Invest in tangible assets: consider purchasing real estate properties or other physical assets that maintain their value over time. Diversify your portfolio: invest in a variety of financial assets, such as stocks, bonds, and commodities, to reduce the risk of losses due to inflation. Consider inflation-indexed investments: look for financial instruments like inflation-indexed bonds or mutual funds that offer protection against rising prices. Monitor and adapt: keep an eye on price trends and periodically review your portfolio to adapt it to current economic conditions. By following these tips, you can protect your savings from the negative effect of inflation and preserve their purchasing power over time..

Read all our in-depth articles on the topic:

• TFR in the company or in a pension fund: how to choose?
• Tax advantages
• How contributions are invested by the Pension Fund
• What does the pension fund control system provide
• The advantages of joining the Priamo Fund