Pension Pillar I is the state social security pension. It is important to take into account the fact that the society of our country is “growing old” due to increasing life expectancy of the population, i.e. the number of future pensioners grows faster than that of future taxpayers. This has a direct impact on the decrease of old-age pensions paid by Sodra. Therefore, in order to secure sufficient income in old age, it is worth accumulating funds independently.
More detailed information on the Lithuanian pension system
Pension Pillar II funds allow accumulating additional funds for old age. The accumulation contribution consists of two parts: contribution from your salary and the incentive contribution from the state budget. Together, Pillar I and Pillar II would allow accumulating for your old age around 45% of your current income.
In more detail
Pension pillar III is the independently accumulated pension based on an investment life insurance agreement or a pillar III pension fund agreement. By accumulating periodically, by the beginning of your retirement, you can accumulate sufficiently for a comfortable living. This accumulation method is subject to an individual income tax benefit. In addition, your employer can pay the whole or a part of the contribution.
Together, Pillar I, Pillar II, and Pillar III would allow accumulating for your old age around 70% of your income received before retirement.
If you wish to maintain your current living standard, your retirement income should account for 70% of your current income. It is possible only if you begin accumulating additional funds for a Pillar II and Pillar III pension as early as possible.
If you are accumulating a Pillar III pension with us, we invite you to calculate whether the amount you are planning to accumulate satisfies you. Click here.
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