Why you should save for retirement?
2+4
1st pillar or state pension ensures your minimum monthly income. To receive a 2nd pillar pension or a mandatory funded pension, you will be paying 2% of your gross income, to which the state adds another 4%. The amount of the disbursement depends on the sum accumulated.
Switch funds free of charge
In 2017, the exit fees of pension funds, that used to amount to 1% of the pension assets accumulated, were eliminated. Now you can transfer the shares accumulated at one fund manager to another free of charge.
Rate of return
The sum you manage to raise is largely dependent on how much you have invested with the help of the state and how much the pension fund manager has grown the savings. In the case of a long-term investment, the investment’s rate of return or investment income, to the extent of which the sum grows, is of key importance.
Pension can be bequeathed
The assets of the pension fund can be bequeathed. Heirs are free to choose whether to withdraw the amount at once or to bequeath your fund shares. Income tax of 20% applies to the cash payments.
Compare performance of the funds
Graph shows a period starting from . The annual geometrical average rates of return for the last 2, 3 and 5 calendar years of the pension funds are available here.
How fund performance affects your pension?
For long-term investing, the return on investment, which is the investment profit by which the saved amount will grow, is of decisive importance. The pension calculator gives a simplified overview of the roles in saving played by contributions made from the salary of the person saving and the yield of the pension fund. How does the calculator work?
Find the right fund
As retirement approaches, you are better having a pension fund with lower risk. When opting for the 2nd pillar pension fund, you should consider: how much time you have left until retirement and what level of risk you are willing to take.
XS or S pension fund
LHV’s S pension fund has a low risk level, since there is no share risk. The fund is suitable if you have only a few years left until retirement and wish to take low risks and be sure the value of your accumulated assets does not fall sharply. If you wish, you can also opt for the XS pension fund with an even lower risk level. Before you make a decision, make sure you review the prospectus outlining the risk level of the fund. Read more
M pension fund
LHV’s M pension fund has a low to moderate risk level, since only up to 25% of the funds are invested in shares. A decline on the stock markets would also affect the value of a fund unit to an extent. If you have very low risk tolerance, it is a good idea to opt for the S pension fund. Before you make a decision, make sure you review the prospectus outlining the risk level of the fund. Read more
L pension fund
LHV’s M pension fund has a low to moderate risk level, since only up to 25% of the funds are invested in shares. A decline on the stock markets would also affect the value of a fund unit to an extent. If you have very low risk tolerance, it is a good idea to opt for the S pension fund. Before you make a decision, make sure you review the prospectus outlining the risk level of the fund. Read more
XL pension fund
LHV’s XL pension fund has a high risk level, since 75% of the funds are invested in shares. If stock markets decline, it could lower the value of a fund unit significantly within a short time. If you have low risk tolerance, it is worth considering the L or M pension fund instead. Before you make a decision, make sure you review the prospectus outlining the risk level of the fund. Read more
Indeks pension fund
LHV Pensionifond Index is a passive fund with a high risk level. Up to 75% of the fund’s assets have been allocated into share funds and the rest is invested into real estate funds. In a passive fund, the structure of the investments is not modified according to the situation on the securities markets: the fund manager’s options of risk management are very limited. If you do not wish to maintain continuous investments on the financial markets, but have high risk tolerance, you may want to consider choosing Pension Fund L or XL. Before you make a decision, make sure to review the prospectus outlining the risk level of the fund. Read more
Do not hesitate to ask questions.
Together we will find the right solution.
Reet Roos
pension consultant
Mon–Fri 8–17
680 2743
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