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Since July, more than 26 thousand people have become new participants in the accumulation of pensions. population that has accumulated to retire this year. Since the beginning of the year, more than 5 thousand. the population itself concluded pension accumulation agreements.
In total, the pension accumulation agreements have concluded almost 1.35 million. population. When many of them receive old-age pension annuities, Sodra will pay periodic benefits for the amount accumulated for the rest of their lives as a self-accumulating supplementary pension.
Where to apply, what to choose?
It will be necessary to buy a pension annuity if the resident has accumulated 10,000. euros and more. This threshold will be indexed every five years.
Upon reaching or before retirement age, but not more than 5 years before retirement, residents may choose one of three types of pension annuities.
The periodic benefits of the standard pension annuity will be the highest and will be guaranteed for the rest of your life. Over time, they may be higher if the return on investment of the Sodra Pension Annuity Fund is higher than that already included in the benefit. But it cannot decrease. The state guarantees that residents will receive the benefits to which they are entitled for the rest of their lives.
The benefits of a standard pension annuity with a guaranteed pay period will be slightly less than those of a standard pension annuity, but if the beneficiary did not reach the age of 80, the unpaid amount for that period would go to the heirs. However, again, benefits are guaranteed to be paid at all times and will not decrease. This type of pension annuity is relevant for those who value inheritance.
Residents who accept investment risk and who expect to leave a portion of the accumulated amount in the pension fund with a higher return on investment may opt for a deferred pension annuity. Then, only a part of his accumulated amount would be transferred to the Sodra pension annuity fund, for which periodic benefits would be guaranteed for the rest of his life from the age of 85. And the remaining amount in the pension fund for up to 85 years would be paid by the pension accumulation company that invests these funds. Benefits would fluctuate, may increase or decrease, depending on the results of the investment, but the remaining unpaid amount in the pension fund would be inherited.
To purchase an annuity, participants in the pension accumulation will have to ask the pension accumulation company to pay the accumulated funds when they reach retirement age or retire early no more than 5 years before the retirement pension.
There, they will be able to choose the type of pension annuity and submit an application to Sodra for a pension annuity, at a single window, or submit an application to pay a pension annuity directly to Sodra. Sodra will calculate and make the decision to pay a certain annuity amount and inform the beneficiary, but the person may submit a request to cancel the proposed pension annuity within another 10 business days.
The size of the pension annuity depends on it.
The amount of each resident’s pension annuity will be determined primarily by the amount accumulated in the human pension fund, their age, the return on investments of the Sodra pension annuity fund, and demographic trends in the country.
Sodra’s actuaries conducted a study, based on long-term statistics, it was estimated that a pensioner who has turned 65 and who would have to buy an annuity will live another 20 years on average, and more than half of them will cross this threshold. A pension annuity provides a stable and stable income, even if a person lives for a long time; Like a retirement pension, a pension annuity will be paid while the person is alive.
“The key word here is probably retirement. The goal of accruing pensions is not simply to save money for old age; the goal is to secure a higher pension, a stable guaranteed income for the rest of your life.
While the first participants in the accumulation of pensions, who will have accumulated 10,000. Payments will currently be around 10%. In addition to the old-age pension, this should not surprise us. However, we gain 35-50 years of experience in old-age pensions, and we only participated in pension accumulation for 15-16 years.
Over time, the number of pension annuity beneficiaries, as well as their accumulated amounts and pension annuity benefits, will grow, ”says Daiva Gerulytė, Head of Sodra’s Pension Annuities Division.
According to data from the Lithuanian Association of Investment and Pension Funds (LIPFA), after estimating the amount of accumulated funds, by 2022, 4 percent. retired accrual participants will buy an annuity, 19 percent. population accumulated less than 10 thousand. You will receive periodic payments, with the majority 77%. may the total accumulated amount of less than 5 thousand. euros, withdraw immediately.
However, after 10 years, more than half of the participants in the pension accumulation will have to buy a pension annuity and, in 2040, 90%. The population that participated in the accumulation of pensions and retirees will have accumulated more than 10,000. euros
The country’s population has accumulated 3.76 billion euros in pension funds, with an average of 2,800 euros per participant. To date, accumulated participants who have retired have already been paid 225 million. euros
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