2nd pension pillar

State funded pension scheme


2nd pension pillar includes the state funded or accumulated pension scheme. It gives you the opportunity to create additional savings to your old age pension provided by the 1st pension pillar. Its aim is to increase your pension capital and the amount of the pension, part of the social contributions accumulating and investing in the financial and capital market – securities and bank deposits.

Contributions to the 2nd pension pillar are made automatically from your gross salary as a share of social contributions.

Afterwards they are invested in your chosen investment plan account in a custodian bank. Management of the capital of the 2nd pension pillar a fund manager carries out through a custodian bank. The obligation of the custodian bank is not only to keep the 2nd pension pillar funds, but also to oversee that the fund manager invests them in accordance with the investment regulations.

A fund manager in accordance with the transferred money amount issues units of the chosen investment plan and notifies the SSIA on their number.

The SSIA registers in your account the number of units of the investment plan corresponding to your pension capital. Once inyour account additional contributions are made they are automatically converted to units of your chosen investment plan. The plan units value changes depending on the investment performance of the plan.

Manager instructs the custodian bank to invest pension capital in the financial market, observing the investment policy set in the investment plan. Thus the capital gains are created – your invested money earns in the financial market, so that you would get a higher pension.

Upon reaching the retirement age, your invested money as well as the capital gain will be used for your pension!

The accumulated capital amount of the 2nd pension pillar depends on:

• your salary;

• the current contribution rate;

• investment profit;

• length of participation time in the 2nd pension pillar before the old age pension request.

The state supervision of a manager and a custodian bank is performed by the Financial and Capital Market Commission.

The 2nd pension pillar was introduced on 1 July 2001. From that date, part of your made state social insurance contributions is not paid to the existing generation of pensioners, but invested and accrued for your pension. The investment objective is to ensure that pension capital would grow faster than inflation and the average salary in the country. Accumulated money along with the pension of the 1st pension pillar will give you additional income in old age.

If you were born after July 1, 1971 and you are working and you are at least 15 years old, then you are automatically registered as a member of the 2nd pension pillar. All you have to do is to choose your investment plan and a funder manager! To choose, you have to submit the application on the state funded pension capital fund manager and investment plan selection/change.

If you were born from July 2, 1951 to July 1, 1971 (inclusive) – you can voluntarily join the 2nd pension pillar. When you have decided to join the 2nd pension pillar, you have to submit the application on the state funded pension capital fund manager and investment plan selection/change. Along with the choice of fund manager and investment plan you will be registered as a member of the 2nd pension pillar.

Engaging in the 2nd pension pillar, you are not required to make supplementary social security contributions.

You can submit the application on the state funded pension capital fund manager and investment plan selection/change:

E-application for on the state funded pension capital fund manager and investment plan selection/change

  • at any office of the SSIA (please take the personal ID document with you);
  • by post;
  • at state and local government unified customer service centers;
  • send with e-signature by e-mail vsaa@vsaa.lv.