Old Age Pension Savings


Pension reform in Slovakia started on 1st January 2004 and its main aim were higher and more fair pensions. This system allows citizens to choose one of the products of their money valorization. The new pension savings system consists of 3 pillars.

Pay-as-you-go (first) pillar is represented by the state-owned social security provider „Sociálna poist(ovn(a“. In the previous system was Sociálna poist(ovn(a the sole institution for pension contributions (in amount of 18%).

Reformed system has divided this amount into 2 equal parts of 9% and 9%. One part is still contributed to Sociálna poist(ovn(a (just like before the amount of 18%) and the second one goes to savings account of the citizen in one of Pension management companies on the Slovak market – Fully-funded (second) pillar.

Pension contributions were and still are automatically contributed by employer. As a citizen you just choose if the whole amount of 18% goes to Sociálna poist(ovn(a or if divided into 2 equal parts – one to go to Sociálna poist(ovn(a and one to go to Pension management company.

Within the second pillar Pension management companies give 3 options how to invest the contributed money:

Conservative fund represents the least risk while 80 % of the finance must be invested in safe bond investments and it traditionally offers the lowest profit. It is meant for citizens who are about to retire.

Balanced fund must invest at least 50 % into bonds and therefore the risk is higher than in Conservative fund. However, this fund can also make more profit compared to Conservative fund.

Growth fund carries the highest risk among these 3 funds. It can be the most profitable though while 80 % of the money can be invested in shares.

Third pillar is voluntary. It represents a Supplementary pension savings and you can contribute to it regardless you remained in the first pillar or you have entered the second pillar. You can find more information on savings in the third pillar in one of Supplementary Pension management companies.

The amendment of Social insurance Act valid since 1 January 2008 opened the second pillar of pension savings system till 30 June 2008. During this period are could all citizens re-think their decision and leave the system. To do so one needed to send a written notice to any branch office of Sociálna poisťovňa.

Since the first opening of second pillar, the system has lost 32 032 pension savers.

As a reaction to the financial crisis and current economy development has government of the Slovak Republic opened the second pillar of pension savings system. In period starting 15 November 2008 until 30 June 2009 can citizens decide if to stay or leave the second pillar of pension saving system.

For more information on old age pension savings visit:

http://www.employment.gov.sk