Who makes investments into 2nd pension pillar?
If you pay by yourself or the state social insurance contributions are made for you, you are insured. This means that you participate in the state pension insurance.
The total amount of contributions to the pension capital remains the same – 20% of your salary. It is divided between the 1st and the 2nd pension pillar, the contribution rate of the 2nd pension pillar is 6% from your annual income of 2016, while 14% remain in the 1st pension pillar. On receipt of your contributions the SSIA record them in your 2nd pension pillar`s account and transfers to your chosen investment plan.
The Section 5 of the Law on State Social Insurance determines which persons are socially insurable persons.
Below are examples, who makes the social security contributions:
- if you are employed by an employer, you are an employee and a part of the social insurance contributions are made by yourself, but half – by your employer;
- if you are a self-employed person, a domestic employees employed at a foreign employer or foreign employees at a foreign employer, contributions you make by yourself;
- if you receive an allowance for childcare, unemployment benefit, a maternity or sickness benefit, the contributions for you are made by the state.
Contribution registration in the participant account of the 2nd pension pillar (state funded pension scheme):
Contributions to the 2nd pension pillar account are registered in the fourth month following the reporting month (from the 1st to the 10th working day) if the information on the reporting month contributions that is received by the State Revenue Service and the SSIA service systems are complete and correct.
If the complete and accurate information on the reporting month payments are received by the SSIA later than the reporting month contribution registration into scheme participants` accounts is made, the reporting month contributions are registered in the scheme participants` accounts within five working days.
After the registration of the contributions, the corresponding amount of money in your account within five working days is being transferred to your chosen fund manager`s investment plan account in the custodian bank.
Investment plan funds are expressed in units of an investment plan. Each investment plan unit`s value of the start of the plan is 1 euro. Further the value of the investment plan unit varies depending on the investment performance of the plan. Based on the information about the value of the investment plan one unit and the accumulated investment plan unit amount on a given day, it is possible to calculate each person`s 2nd pension pillar`s (funded pension) accumulated capital.
If you are not satisfied with your chosen investment plan, once in a calendar year you can change the fund manager and two times in a calendar year you can change one fund manager`s managed investment plans.
