30th of September 2024
Pension savings is a form of long-term financial security. Its goal is to create the savings for the retirement. In Slovakia, pension savings are divided into 3 pillars, namely the 1st pillar (Ongoing pension system), the 2nd pillar (Old age pension savings) and the 3rd pillar (Supplementary pension savings). In the following text, we will take a closer look at 2nd and 3rd pillar.
Voluntary pension savings system, which – together with the first pillar – forms the basis of the pension system in Slovakia. The money that is managed in the 2nd pillar is – in contrast to the money that the saver pays to the Social Insurance under the 1st pillar – the property of the saver. It can be inherited, invested, valorised, and the saver can also choose the method of withdrawing it. Anyone entering the labor market from 1/5/2023 is automatically entered the 2nd pillar. Since the system is voluntary, the saver can withdraw from the second pillar within 2 years. In the event that a new saver does not choose a DSS within 6 months, the Social Insurance will assign it to him. Those entrants who were employed before 1/5/2023 can enter the 2nd pillar before they turn 40 years. By entering the 2nd pillar, the mandatory contributions in the total amount of 18% are divided into two parts, namely 14% which remain in the 1st pillar and 4% which the Social Insurance transfers to a pension account in the pension administration company (DSS).
A pension savings system that is voluntary and participants’ funds are managed by supplementary pension companies. It is another source of income in addition to the 1st and 2nd pillars. For persons over 18 years of age, the enrollment into the 3rd pillar is voluntary, but for employees who perform risky work, the enrollment within 30 days of starting to perform risky work is mandatory. Other employees, as participants in supplementary pension savings, pay contributions to supplementary pension savings themselves. Contributions can also be paid for these employees by their employer, if he has concluded an employment contract. If the employee decides to save in the 3rd pillar, he must conclude a participation contract with the selected DDS. The employer of such persons is not obliged to conclude a contract with DDS. Often, however, the employer offers contributions to the 3rd pillar as a benefit for its employees. This saving has two phases, namely the saving phase, when you or your employer pay the contributions, and after the saving phase is completed, there is the withdrawal phase. If the contract was concluded after 1/1/2014, the right to pension payment from the 3rd pillar arises only upon reaching the retirement age. You can withdraw money early only once every 10 years, and you can do so for the first time no earlier than 10 years after the conclusion of the contract. You can withdraw your contributions, but not the employer’s contributions.
Written by: Anna Kolesárová
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