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Along with the approaching end of the year, more and more people not only hurry up and purchase Christmas presents for their relatives, but also supplement their 3rd Pillar pensions, thus voluntarily saving up for their old age.
“Already for many years we may observe that the average instalments in December are twice or even three times bigger than any other month,” says Ilja Arefjevs, Member of the Board of Luminor Pensions Latvia. “Of course, the best would be to take regular care of our welfare in old age. However, there are several reasons why the activity of customers in this matter increases right by the end of a year and why it is worth considering starting saving up 3rd Pillar pension still this year.”
Last chance - make payments this year and get a bigger tax return
End of a year is the right time to make payments in 3rd Pillar pension, because knowing your annual gross salary it is possible to precisely calculate the amount of payments to get the tax return already in the beginning of the next year. It is important that making payments in the 3rd Pillar pension by the end of this year, it will be possible to get the income tax return in the amount of 23%, but, as of 2018, the income tax will be returned only in the amount of 20%.
Likewise, this is the last opportunity to make payments in 3rd Pillar pension for up to 10% of the gross salary, getting the income tax return. As of the next year the income tax will be returned from the instalments in 3rd Pillar pensions and life insurance with a savings component, which do not exceed 10% of the gross salary in these both savings products, but not more than 4000 euro.
Full safety – capital owned only by you
3rd Pillar pension is very safe and is fully protected from the insolvency of the pension fund, administrator or custodian bank. Pension capital is owned only by the customers - it is kept separately from the money of other customers or the bank.
Choose what suits you best and increase your capital
Although the previous profitability may not guarantee any similar results in future, 3rd Pillar pension plans from their very beginning up to this moment have demonstrated positive performance, considerably increasing the capital of our customers. In 3rd Pillar pension it is possible to choose the investment strategy that suits you best, investing in one or several pension plans.
Luminor offers two plans - balanced and progressive. The balanced pension plan with even investment policy is the most popular. It is more suitable for customers, who wish to withdraw their pension capital no later than after 10 years. The progressive pension plan, in its turn, has a considerably higher risk; however in long term it has usually paid back, allowing the customers earn more. The progressive pension plan is for those customers who plan to start using the pension capital no sooner than after 10 years.
Inheritable and transferable
3rd Pillar pension capital may be inherited. Moreover, you may specify people in the agreement, who would receive this capital following a simplified procedure in comparison with the standard inheritance procedure provided by the Civil law, which may be rather complicated and time consuming.
3rd Pillar pension capital may be transferred to any other private pension fund registered in Latvia without any commission fees. Likewise, it may be transferred to a pension fund registered in any other member state of the European Union, complying with the requirements of legal enactments. It is very essential, as the customer has a great variety of pension funds to choose from, but at the same time ensuring that the pension capital remains safe.
Every third economically active person has joined 3rd Pillar pension
According to the data of Association of Latvian Commercial Banks every third economically active person has joined 3rd Pillar pension. As the experience of the developed countries shows, every second economically active person has private pension savings. It means that the number of private pension fund customers will continue to increase, especially by the end of a year, when people more actively think of their welfare during the old age. A decision to save up pension in 3rd Pillar undoubtedly will serve as an essential supplement to the state guaranteed pension in future, that is why the end of a year is the right time to start saving up for better life, not just pension.
More information on 3rd Pillar pension.
Media contacts: Lita Juberte-Krūmiņa