There's a truth that today's thirty-somethings only half know: the state pension will exist, but it will be far lower than they imagine. Under the contribution-based system, the payout depends on how much and for how many years you've paid in — and on careers that are often discontinuous. The result is a replacement rate — the ratio between first pension and final salary — destined to fall well below the levels of previous generations.
Why does starting early matter more than how much you pay in?
A supplementary pension isn't a financial gamble: above all it's a matter of time. Thanks to compound interest — returns that in turn generate further returns — every year gained at the start is worth far more than a year gained at the end.
An example makes it clear. Paying €100 a month with an average return of 4% a year:
- Starting at 30, by 67 you reach around €100,000.
- Starting at 45, with the same contribution you reach about €41,000.
The same monthly effort, but a result more than double. The difference isn't in the money paid in — in fact, those who start earlier pay only a few thousand euros more in total — but in the years that money has had to work.
The best time to start was ten years ago. The second-best time is today.
Not just time: the taxman helps too
Those who pay into a pension fund enjoy two concrete benefits:
- Immediate deductibility: contributions, up to €5,300 a year, are subtracted from taxable income. In practice, part of what you pay comes straight back as lower taxes.
- Reduced final taxation: the benefit is taxed at a rate starting from 15% that falls to 9% with length of membership — far less than ordinary taxation.
"I'm young, I have time": that's exactly the point
The most common thought at 30 — "I'll think about the pension later" — is exactly the mistake that costs the most. Not because of a lack of discipline, but because you give up the one ingredient that can't be bought at any price: the years. Small, steady amounts are enough; what matters is to begin, even with little.
Where do you start?
The first step isn't choosing the "best" fund, but understanding where you stand: roughly how much your state pension will be, what the gap is, how much you can contribute without straining the present. From there, the path becomes simple — and surprisingly light. When you get to choosing the instrument, here are the criteria for weighing fund types, risk lines and costs.
