Throughout your professional career, part of your income in the form of social security contributions goes toward compulsory pension insurance. Compulsory contributions are distributed in a legally defined proportion between the State Social Insurance (SSI) and the Supplementary Compulsory Pension Insurance (SCPI).

The portion of the contribution allocated to the SSI goes to the Pension Fund of the National Social Security Institute (NSSI), while the portion intended for SCPI is credited to your individual account in a Universal Pension Fund (UPF) or a Professional Pension Fund (PPF). If you have transferred your UPF funds to the SSI, your entire contribution goes to the NSSI Pension Fund. The process is administered by the National Revenue Agency (NRA).

Over the years, this allows you to accumulate entitlements under the state social insurance (SSI) and build up funds in your individual account in a UPF or PPF. As a result, you are entitled to receive two pensions – one from the SSI and one from the UPF. A pension from a PPF is paid for early retirement of individuals working under Category I or II labor conditions until reaching the standard retirement age and cannot be received simultaneously with a work-related pension or a social disability pension. If you have transferred your UPF funds to the SSI, you will receive a pension only from the SSI.

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·         Pension Insurance section, I Want to Learn category

Contributions to the state social insurance system (SSI) and to the Supplementary Compulsory Pension Insurance (SCPI) are based on your insurable income, with established minimum and maximum thresholds. The higher the income on which you pay contributions, the greater the entitlements accumulated in the first pillar and the amounts in your individual account in the second pillar, and consequently, the higher your expected pension.

It is important to note that funds in the first pillar (SSI) and the second pillar (SCPI) are managed differently. In the SSI system, current contributions from employees are used to pay pensions to current retirees. In other words, factors such as the number of active contributors, the amount of contributions paid into the SSI, and the number of pensioners at a given time play a key role.

In the SCPI, implemented through Universal Pension Funds (UPF) and Professional Pension Funds (PPF), each insured person’s contributions accumulate in an individual account and are invested by the pension insurance companies managing the respective funds. The pension depends on the amount of contributions, the length of the contribution period, investment returns, and the fees and charges applied by the fund. In other words, each participant’s pension is determined proportionally to their contributions and is also a function of how effectively the pension insurance company manages the accumulated funds in the individual account.

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• Pension Insurance section, I Want to Learn category

You can obtain this information in various ways from the pension insurance company that manages your pension fund. According to the provisions of the Social Insurance Code, each year in May your pension insurance company sends you an annual statement for your account. It contains information about the status of your account for the previous year – the total amount of accumulated funds, the number of units you hold, and the value of one unit.

The statement also shows the date and amount of each contribution, as well as the month to which each contribution applies. It provides the total deductions from contributions during the year and the investment fee (as a percentage of the fund’s net assets). The annual statement is sent by mail to the address you have provided, so it is important to notify your company if your address changes. You can also request to receive it electronically at a specified email address.

In addition, you can contact your pension insurance company at any time to request information about the status of your individual account. Most companies also offer online services for clients to check the current status and movements in their individual accounts.

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·         Pension Insurance section, I Want to Learn category

The funds in the individual accounts of insured persons in a pension fund, managed by a pension insurance company, are recorded both in monetary terms and in units. Units represent equal proportional shares of the net assets of the respective pension fund, and all units within a single fund have the same value. The fund’s assets consist of the contributions of the insured persons allocated to that fund.

Investment income is distributed daily to the individual accounts of the insured persons in proportion to the number of units they hold. As investment returns increase, the net asset value rises, and accordingly, the value of each unit increases. The opposite is also true – if returns decrease, unit values fall. The total amount in an individual account is calculated by multiplying the number of units held by the value of one unit on the corresponding business day.

This method of allocation ensures that investment returns are distributed proportionally among all participants in the fund. It is important to note that pension investments are long-term in nature. Pension insurance companies publish the daily unit value for each fund they manage at their offices and on their websites. Information is also available on the Financial Supervision Commission (FSC) website.

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·         Pension Insurance section, I Want to Learn category

To achieve financial security after you stop working, your retirement income should be sufficient to replace your employment income – if not fully, then at least to a significant extent. The pension you receive through compulsory pension insurance may not be enough. Therefore, it is wise to start planning for your retirement period early in your career.

Providing financial security for retirement is the longest-term financial goal and requires careful planning, aligned with the stages of your life. It is a personal decision about which tools to use at different stages to accumulate funds for retirement. The options are numerous – ranging from voluntary pension funds, life insurance policies, classic investments in real estate or financial instruments, to various alternative investments. By converting accumulated assets into cash, you can ensure additional funds to supplement your disposable income to the desired level.

Since this is long-term planning, it is advisable to review your strategy annually and adjust it according to your progress and the current financial, legal, tax, and personal circumstances.

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·         Planning My Retirement page, My Career Path section, Life Events category

·         Prospects for a Higher Pension page, Pension Insurance section, I Want to Learn category

·         Investing section, I Want to Learn category