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SLOVAKIA : OLD- A GE PENSION SAVINGS („II. PILLAR“)

Explore the mandatory and voluntary old-age pension savings system in Slovakia, including its basic characteristics, weaknesses, and current and future steps for improvement.

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SLOVAKIA : OLD- A GE PENSION SAVINGS („II. PILLAR“)

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  1. SLOVAKIA : OLD-AGE PENSION SAVINGS („II. PILLAR“) BrusselsVladislav Borík May 7, 2009 Head of Service Office Ministry of Labour, Social Affairs and Family of the Slovak Republic

  2. 1. Slovak Pension System Mandatory pension system Pillar I • Mandatory pension insurance, DB, PAYG (administered by the Social Insurance Agency). Pillar II • Mandatory old-age pension „saving“(investment), DC, Funded (administered by the Pension Administrator Companies). Voluntary supplementary pensions Pillar III Supplementary pension saving, DC, Funded (administered by the Supplementary Pension Companies). • Special-purpose saving and the life insurance with tax incentive.

  3. 2. OLD-AGE PENSION SAVINGS BASIC CHARACTERISTICS • Voluntary system for those entering the labour market • During transitional period, all insured persons were allowed to enter the system regardless of age • 9 %-rate for contributions to old-age savings • Minimum saving period - 15 years • Introduction of ownership rights to personal accounts and bequests • Pension funds – growth, balanced and conservative • Types of reimbursements: payment for administration of pension fund + payment for conducting personal pension account (as of July 1, 2009 – payment for increased assets value)

  4. 3. OLD-AGE PENSION SAVINGS – WEAKNESS OF THE IMPLEMENTATION • Insufficiently adjusted annuity phase • Absence of competitive environment • Absence of guarantees • Amount of contributions to the Pillar II. fails to correspond with existing economic environment • Transfer of finances from personal pension accounts to the third parties • Joint administration of personal pension accounts and investments

  5. 4.AGE DISTRIBUTION OF PERSONS PARTICIPATING IN THE PILLAR II. ON DECEMBER 31, 2008 Necessary period of saving in the Pillar II. is at least 30 years according to opinions of MoLSAF SR!

  6. 5. Old-Age Pension Savings – current value of pension funds on 15.4.2009

  7. 6. Old-Age Pension Savings – Present Steps • Adjustment of investment rules • Temporary Pillar II. opening (2008, 2009) • Higher quality of information provided to insured persons and other entities in the Pillar II. • Shortened period of transfer in between complementary pension administrators • Optimization of payment for administration of pension fund • Introduction of reimbursement for increasing value of assets in the pension fund • Introduction of guarantee account in the pension fund

  8. 7. Old-Age Pension Savings – Future Steps • Preparation of pay-out phase • Deepening of competitive environment • Strengthening of participant’s position in the old-age pension system

  9. Thank you

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