1st pension pillar

State unfunded pension scheme


1st pension pillar – state compulsory unfunded or non-accumulated pension scheme. This pillar means that the social security contributions paid from your salary are accounted to your pension, as well as payed to the existing generation of pensioners. It foresses – the longer you will be working and paying social security contributions, the bigger pension you will receive in old age.

In the 1st pension pillar was introduced on January 1, 1996 and all social security contributors are involved in it. This pillar provide old age pensions to all those who worked in paid employment for at least 10 years. The last amendments of the Law on State Pensions foresee that the minimum insurance period for the right to receive state old age pension will be increased to 15 years, with effect from January 1, 2014, and up to 20 years with effect from January 1, 2025. The State Social Insurance Agency calculates and provides payment of the old age pension of the 1st pension pillar. Currently, the social contribution is 35.09% of your gross salary and in the pension capital 20% are recorded. You have an account in which contributions made are recorded.

The 1st pension pillar is based on the gender and generational solidarity. Intergenerational solidarity means that payments for old age pensions are not held as a long term investments, but used for the payment of old age pensions to the existing generation of pensioners. Gender solidarity is reflected by the rule that for both women and men after retirement equal time period of payment is forcasted (the average male and female life expectancy after retirement).