The current situation shows that everyone must think well in advance about his or her welfare under retirement. During retirement a person needs approximately 70 % of previous income, however, the state guaranteed pension capital will cover only partially the needs. In order to enjoy well-off retirement it is advisable to take care of that on your own.
In order to sustain the level of welfare also during the retirement age you should take advantage of opportunities offered by the second and third pillar (or private pension) of the pension system. We invite you to learn more about opportunities offered by Pension and we encourage you to entrust your pension savings to the largest and most stable private pension manager in Latvia which takes advantage of experience and expertise of Swedbank Group in the field of asset management!
Three pillar pension system
There is a three - pillar pension system in Latvia, the first two pillars being compulsory and comprising social tax payments and the third pillar is voluntary.
First pillar. State compulsory unfunded pension scheme.
A part of social insurance contributions made by you or your employer enables the government to take care of people who are currently retired. The longer you will work and make social contributions, the larger state pension you will receive during your retirement.
Second Pillar. State compulsory funded pension scheme.
The second pillar of pensions is an opportunity offered by the state to increase your pension by entrusting a part of social tax payments to professional fund manager who invests these assets in securities and raises earnings. The amount of the accrued pension will depend not only on your salary and contribution rate but also on your selected fund manager, investment scheme and length of participation in this pension pillar.
Any resident of Latvia who was born after 1 July 1951 can participate in the second pillar of pensions and residents who were born after 1 July 1971 are obliged to participate in this pillar.
Third pillar. Private pension.
The third pillar of pensions provides you with an opportunity to make additional savings on voluntary basis to enhance the level of welfare during your retirement age. You can make your personal savings or they can be made by your employer. By taking advantage of tax relief stipulated in law and without making considerable costs for the time being it is your opportunity to boost the level of welfare during your retirement age with the help of contributions made into private pension funds or pension savings with life insurance. Moreover, you can receive your private pension at the age of 55 before you get your state guaranteed pension.
