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If I am about to start working
If you are still not working, going on a pension may seem ages from now, and it is too early to think about it. However, you should keep in mind that the earlier you start to insure for a pension, the more the funds you will have at your disposal when you retire.
How can you do that?
The mandatory insurance contributions start to be withheld from your salary the moment you enter in to an agreement – whether labour or free-lance. Your contributions for supplementary mandatory pension insurance will be directed to a universal pension fund of your choice. The contribution for a universal pension fund for 2020 amounts to 5% of your insurance income, of which 2.8% is paid by the employer and 2.2% - by the employee. The amount of the insurance contribution is determined by the Social Security Code every year.
It is important that to know that if you do not choose a pension insurance company to manage you funds for a second pension, the National Revenue Agency will administratively assign you to one of the companies for supplementary pension insurance. When you choose 5% of your insurance income to be transferred to a universal pension fund of your choice, the contributions made will be deposited on your own insurance account and will be invested according to certain standards and rules, to achieve yield in a long-term perspective. It is crucial that you choose a pension company that will manage your funds responsibly and professionally for the years before you retire.
You can transfer the funds accumulated on your individual account to another pension fund, if one year has passed since you enter your first insurance agreement and one year after the latest transfer .(the one-year term shall apply both from the last change of participation and from the conclusion of the first insurance contract, the official distribution or the resumption of the insurance in UPF under Art. 124a of SIC.)
According to the changes in the Social Insurance Code adopted end of July 2015, persons born after December 31, 1959 can decide to either continue to insure with a universal pension fund, managed by a company for supplementary pension insurance, or choose to transfer their whole pension contribution to be deposited to the Fund “Pensions” (respectively Fund “Pensions for persons according to article 69 of the Social Insurance Code*) of State Social Security. Thus they can transfer their individual savings managed by private pension funds to the State Pension Fund (first pillar) and to continue their pension insurance in first pillar only. The change from insurance in universal pension fund into the "Pensions" Fund, respectively the "Pension of the persons under Art. 69" Fund of SIC*, and vice versa may be repeated but after at least 1 year after the last change of the insurance. The final choice must be made no later than 5 years before the retirement age is reached by the respective person under Art. 68, Para. 1 of SIC and if a pension for pensionable service and age is not granted.
If you want to learn more, look at the text on Switch from a Universal pension fund to Fund “Pensions” and back in Supplementary mandatory pension insurance.
The funds transferred to the Silver Fund do not provide any extra income and cannot be inherited for the period of their stay in the Silver Fund. During this period, the insurance contributions for UPF are not paid to the person's individual insurance account and to the Pension Fund of the Social Security Fund.
What is more, to make sure you have a good standard of life and secure financial future, besides the mandatory insurance you should insure with a voluntary pension fund. Supplementary voluntary pension insurance gives you the opportunity for long-term saving by using the advantages of capital management of the amounts for the purpose of accumulating profit and supplementing the pension paid by the state social security and the universal pension fund. This type of insurance is voluntary, as far as whether you are insured or not is concerned, or what the sum is for which you are insured. In all cases, though, you are entitled to a 10% tax reduction on your yearly insurance income. The amounts paid off by the voluntary pension fund after acquiring the right to a pension, irrespective of the mode of payment you choose, is not subject to taxes.