[Slovakia] Pan-european personal pension product. Voluntary retirement savings.

The pan-European personal pension product represents an individual’s voluntary savings for retirement through long-term savings and investment products that are not part of supplementary pension savings.

Advantages

The pan-European personal pension product is particularly interesting for its portability in the countries of the European Union. Its advantages could be appreciated primarily by mobile workers and people who plan to spend their work abroad as well as foreign workers from EU member countries working in Slovakia. The pan-European personal pension product is also a reasonable solution for self-employed people. The savings can be transfered to any EU country.

Conditions

Only an adult can become a saver, but receiving a taxable income is not a condition for saving a pension through a pan-European personal pension product. This means that even an unemployed person, person on maternity or parental leave, or a student can also be a saver in such pension savings if they are able to contribute to their future pension. The contribution amount is not limited.

Tax benefits

From January 1, 2023, the saver’s contribution to the pan-European personal pension product is a non-taxable part of the income tax base up to €180 per year in total for all forms of pension savings, i.e.  for the pan-European personal pension product as well as supplementary pension savings. During the duration of pension savings, the accumulated property of the saver is not taxed. Benefits paid from a pan-European personal pension product are treated as income from capital assets and taxed at a rate of 19%. The basis of the tax is the benefit reduced by the contributions paid.

Providers

The saver’s invested funds are managed by a pan-European personal pension savings provider, which, after meeting the specified conditions, can be:

• Supplementary pension company;
• Insurance company;
• Bank;
• Administration company;
• Broker.

The condition is the registration of the pan-European personal pension product provider in the central public register maintained by the European Authority for Insurance and Occupational Pensions (EIOPA).

Terms of payout

The following benefits can be paid from the pan-European personal pension product:

• Pension;
• Program selection;
• One-time settlement;
• Early withdrawal.

The pension is paid in the form of a lifetime pension or a temporary pension.

The lifetime pension is paid during the lifetime of the beneficiary of the pan-European personal pension product until the beneficiary’s death.

The temporary pension is paid for at least five years from the entire assets of the saver of the pan-European personal pension product.

The first payment of a lifetime pension or a temporary pension can be paid at most in the amount of 25% of the value of the assets of the saver of the pan-European personal pension account.

At the saver’s request, the provider will pay the saver a one-time settlement in the amount requested by the saver, if the value of the saver’s assets of the pan-European personal pension product is lower than four times the average monthly wage in the economy of the Slovak Republic for the two previous years, or five years have passed since the saver reached the age necessary to be entitled to an old-age pension according to a special regulation.

Conditions for payment of pension, program withdrawal or one-time settlement

• entitlement to the payment of an old-age pension from the mandatory pension insurance (Pillar l.);
• entitlement to the payment of an early old-age pension from the mandatory pension insurance (Pillar I.);
• reaching the age necessary to become entitled to an old-age pension from the mandatory pension insurance (Pillar I.).

To a saver who does not meet the conditions for payment of a benefit from a pan-European personal pension product, the provider will pay an early withdrawal at his request, in case:

• unfavorable state of health of the saver, which represents disability due to a decrease in the ability to perform gainful activity by more than 70%, and this fact occurred after the conclusion of the contract, or the saver is a physical person with a severe disability. In such a case, the entire property is paid out in a one-time withdrawal;

• long-term unemployment of the saver (the saver is listed in the register of job seekers for at least 12 consecutive months) and has reached the age of 57 years. In such a case, the saver’s property is paid out for at least 5 years or by one-time withdrawal, if the value of the saver’s property of the pan-European personal pension product is lower than four times the average monthly wage in the economy of the Slovak Republic for two previous years.