Studied pension reform and options more thoroughly. Now let's go over the main issues.
I wrote earlier, in a previous post, that on October 20, 2020, the pension reform was finally recognized and, in this regard, several opportunities opened up.
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🍀The most important question: what options have you opened up thanks to the reform?
1️⃣ Continue saving as planned (it turns out not such a bad idea now).
2️⃣Finish payments, leave the already accumulated part.
3️⃣Finish payments and collect all the money.
4️⃣Start managing your funds through a retirement investment account.
5️⃣And the last one: to join those who have not previously participated in it.
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The most interesting question is when can I take all the money?
Applications can be submitted from January to the end of March 2021. The money will be received in 5 months - in September. But you don't have to do it right away, the opportunity to withdraw your money will always remain and you just need to wait every 5 months after the end of the application period.
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The most difficult question, but is it worth it?
Essentially, this leaves three equally good choices:
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1️⃣Continue saving as before in the II pension pillar. But with this choice, it is better to change all funds to Index funds. The annual fees of the funds are very low, around 0,7%. At the same time, you will be paid 4% every month from the state, which will go to the II pillar. You retain all rights to make payments from the pension pillar or convert it into a pension investment fund.
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2️⃣Transfer everything to a retirement investment account. Currently only LHV has this option, but other banks will also make their offers in the coming months. LHV's proposal is also quite interesting and differs little from the proposal to leave everything in the II pillar, if both invest in the same fund, for example, in the Index Fund. At the same time, you still have the opportunity to invest somewhere else besides the usual fund. You can even send money to Tesla or Bitcoin funds, but be aware that LHV fees hit your wallet hard there.
3️⃣Pay out all the money and lose 20% of the savings. You will not be able to join the 10nd pillar accumulation system for the next 2 years, but you will receive liquid money and decide what to do with it. An alternative could be to invest through Revolut and send it there every month for free in the shares of specific companies, compiling your own portfolios (also a good idea). Or buy a property = use the money for a down payment on a loan. Definitely a bad idea to just spend all that money.
What will I do?
First of all, I have already sent requests to change pension funds from those that I have today to change to new ones - Index. What for? The fact is that such funds are cheaper to maintain and move much better than any other possible today.
Further it is more difficult. All 3 options listed above are not bad, more difficult to decide 3️⃣ - payout. If in the previous post I unequivocally believed that it was better to run out of the pension pillar, now, after a detailed consideration of all the conditions, the alternatives turned out to be not so bad. I definitely advise you to take a closer look at PIK (pensioni investeerimise konto). LHV, SEB, Swedbank, Luminor have already released their products and can be considered. One way or another, choosing between 1️⃣ and 2️⃣ you definitely won’t make a mistake, but with 3️⃣ you can get burned.
Other matters
Can I revoke my withdrawal if I change my mind?
➡️ If you applied for withdrawal, but then changed your mind, you can withdraw it within the time limits depending on the time of application.
Will leaving the 2nd pillar affect my 1st pillar?
➡️ For those who joined the funded pension, 16% of the social tax goes to the calculation of the 1st pillar pension and 4% to the pension fund of your choice. If you now leave the 2nd pillar, 20% will go into the calculation of the 1st pillar pension. Simply put, this will increase your potential state pension with a solidarity contribution of 1 instead of 0,8. It is difficult to say whether this will be more profitable in the long run than placing in 2. There are many factors and variables (depending on whether, for example, a state pension will be paid at all in a few decades).
Can I add money to a retirement investment account myself?
➡️ Unfortunately, you can't.
Can I partially pay out money from the 2nd pension pillar?
➡️ No, if you are withdrawing money from the 2 pillar pension, you will need to withdraw the entire amount and it will be paid to you in one payment.
And about what people have already asked and how they commented, you can also look at Instagram