A strange fault is included in the additional accumulation for retirement: when can you resign?

Sodra: returns people’s trust in the system

According to Daiva Gerulytė, head of the Sodra Pension Annuities Department, this year residents are more actively choosing to participate in pension accumulation; many people have decided to participate and say they accept automatic inclusion. She points out that the system is gradually stabilizing, more information can be found on what will happen after July 1, what benefits they will expect in the future, which is said to encourage people to accumulate for retirement.

Last days of selection, i. and. According to data from June 30, 2006, approximately a third of the population (approximately 14 thousand Delphi) stated clearly that they did not wish to participate in the hoarding. Additionally, around a couple of thousand people who were automatically included in the treasury chose the specific company they would like to accumulate. Almost 4 thousand more. the people signed contracts with pension accumulation companies on their own, although they were not included in the accumulation.

“So those who have not clearly expressed an opinion on what they want to do may just agree with what is offered to them. One third of people who give up are close to the global standard, when they are generally around 85% people agree to be included, and only about 15 percent refuse.

Compared to last year, when one-third agreed to be included and two-thirds declined, this year we can clearly see that we are approaching the global trend that the decision to automatically include people was the right one because sometimes one person it will not do something useful by itself. (…) I think confidence in the pension accumulation system is returning, “says a representative from Sodra.

INVL: Some ask “what happened here?”

Dalia Kolmats, director of pension funds and retail at INVL Asset Management, says there have been few recent questions from participants about pension accumulation, even more so in August, when the first messages are sent to participants, and some people they ask “what happened here?” “

“Last year it was good that the Pension Reform was carried out and there was a lot of general communication, so the residents received that information. This year, the process is quieter in the media, so people lack of information, “says D. Kolmatsui.

Furthermore, he draws attention to the problem that when receiving data on newly recruited participants from Sodra, their contact details are not always correct: accumulation system, as it is still a problem for people to contact companies and update your contact details first. “

Why do people refuse to accumulate?

Marijus Kalesinskas, Chairman of the Board of the Association of Pension Fund Participants, points out that there are many reasons why people refuse to participate in the accumulation of pensions. It is true that such an option in the pension accumulation system is valid only for newly admitted residents, because those who are already participating can no longer choose not to participate.

“Young people are newly involved. From what we find in practice, they see retirement still very far from the point of their current life, it is not relevant to them, they think little about it, although it is very misleading. When you start preparing early, When the accumulator starts preparing for retirement from a very young age, it requires the least effort and the result is the best.

Another reason is understandable and quite rational. Young people raise families, get loans, and buy their first homes or other major purchases. They are particularly short of cash flow at the time, as wages are often not high when they start their careers. This means that your income is extremely limited and that every euro is important. Therefore, after rational evaluation, some do not see opportunities for long-term dedication at this time, ”teaches M. Kalesinskas.

What to do in case of late refusal to participate in the accumulation?

D. Gerulytė, a representative of Sodra, when asked how many newly admitted residents, who no longer wish to accumulate a pension, apply after the deadline, that is. and. after July 1, it ensures that an extremely small proportion.

“Last year, around a thousand people applied, and even fewer had objective reasons. In summary, it can be said that only about 1 percent. People have complaints that they have been automatically included,” says the interlocutor, adding Sodra satisfied less than a third of the requests to cancel the pension accumulation. Consequently, two thirds (approximately 600) of the population remained retired, although they did not want to.

“A person does not live at the address to which the registered letter is sent, does not have a Sodra resident account and has never opened one. We see when a person opens his account and sees our message. If he looked at it and then says that I didn’t know anything about accumulation, etc., so that argument is no longer valid. Also, if a person has been away for a long time and couldn’t really know who would be included. In each individual case, it is necessary to assess whether those reasons are serious ”, – D. Gerulytė points out the reasons why residents can cancel the accumulation of pensions after the term.

According to the cumulative representative, when people automatically participate in the accumulation and are not even aware of it, there is some confusion.

“When the reform proposals were prepared, we did not support automatic inclusion, we said that it would be better if the choice were left to the people themselves. On the other hand, automatic inclusion is beneficial for some because people would not be prepared to deal with the problem , they would delay, they would not be interested enough. You may want to accumulate, but do not take active action and take care of your own distant future. Therefore, automatic inclusion works as a kind of reminder, especially when there is an opt-out option in half a year, anyone who is actively interested should have enough time to assess whether they want to be included in the accumulation or whether it is better to give it up.

We don’t see a big problem, but there are curiosities: people don’t get the information, they only realize in July or August that they were involved because they didn’t know anything, they didn’t understand. Unfortunately, it is too late to give up right now. It is still possible to think about how this system could be improved ”, says M. Kalesinskas.

What should people do who have been automatically included in the treasury but who have changed their minds or have not noticed? According to the representative of Sodra, it can be difficult to do so.

“You can’t give up much anymore unless you can write a complaint that it was incorrectly included, you didn’t have a chance to unsubscribe in six months.” Each of these cases would be examined: Are there really objective reasons why a person could not surrender in half a year?

People should view their contact details a little more responsibly and update the system, in which case the information would reach people more quickly and in a timely manner. For those who did not open their resident account to read the message, 3 or 4 registered emails were sent. It has been remembered enough times, so I don’t know how many more reminders should be sent to them, “says D. Gerulytė.

Until June 30th. Residents newly involved in pension accumulation may decide to enter into an agreement with the desired pension accumulation company, do nothing and start accumulating a pension in a company randomly selected by Sodra, or send a request to the resident not to participate in the accumulation in the personal account of Sodra.

Why save for retirement?

D. Kolmats, a representative of a pension accumulation company, advises a young man who recently entered the labor market to think about his future immediately and take charge of his pension.

“Society is aging, the state guaranteed Sodra pension alone is not enough for a dignified old age, therefore reforms and automatic inclusion have been carried out. There are expert calculations that the Sodra pension will provide 30- 40 percent Human income they received before retirement European standard: 70-75 percent ex-income He has to find the rest himself to save.

Through automatic inclusion, the state plays an active role by urging that this issue be addressed as soon as possible. It is estimated that from the second pillar, a resident can increase his pension by another 15-20 percent. On average, your pension, compared to your pre-retirement income, could be 50 to 55 percent, ”says an INVL representative.

You can find out your future pension on Sodra’s calculator by entering your income, length of service, and number of points.

According to D. Kolmats, the longer the decision is postponed, the more costly it will be: “It is said that after 30 years of accumulation, it would be enough to postpone 10%. Your income should differ from the age of 30 to 15 percent, and when start accumulating when you are 40, maybe 20 or even 30 percent. You will have to defer your income. “

In addition, as pension funds are invested, the compound interest effect is applied. Therefore, as the interlocutor observes, the later the decision to accumulate and invest funds is postponed, the less the effect.

“That means that if 20 years are left until retirement, during that time, funds average 5 percent. After-tax refund may double. If I start saving and my period is 40 years, comparing how much I paid and how much I will save, it is predicted that it can be between 5-7 times more than what I paid ”, explains the long-term investment effect for Kolmats.

What type of pension can I expect when I reach old age?

The type of pension that can be expected in old age depends not only on the period in which the resident begins to accumulate, but also on the fund in which other factors are invested.

“That is why the life cycle funds reform has been implemented, to encourage people to invest so that the portfolio structure matches their age. We had such a problem that Lithuanians invest too conservatively. As a result, We were able to take advantage of the growth in the stock markets last year, we also had a drop this year, but the long-term result should be better.

The pension will also depend on whether the resident continues to work or take breaks in his life, because if he or she does not work and does not receive taxable income, their contributions to the level II pension are not calculated. Also, what kind of accumulation will you choose, because now the automatically included people accumulate according to the gradual accumulation system, they accumulate 2.1% instead of 3%. of the salary, and the state incentive is 0.6% instead of 1.5%, respectively. of the average salary.

It will also depend on the fiscal policy of the state. The state has revised taxes very drastically and has reduced them: next year, pension funds will apply just 0.5 percent. management fee, this will affect the total amount accumulated, “says the interlocutor.

According to her, by accumulating only in the second stage, the population will not have a completely dignified old age, as understood in Western Europe, and therefore demands an additional choice of other instruments of austerity.