We don't like to think about what will happen when we are no longer in this world, but in some matters, it's worth considering in advance. Especially when it comes to finances. Many people don't think about what will happen to their pension savings if they don't live to retirement age. However, it's important to know that the money accumulated in your pension fund (at least partially) can be bequeathed to your loved ones.
1st pension pillar: every month, 14% of your income subject to social contributions is forwarded to this pension pillar. In this level, the pension is accumulated virtually, meaning your contributions are recorded, but in reality, these funds are paid to today's pensioners. So within the first pension pillar, you're saving for your own retirement while simultaneously contributing to today's pensioners. However, if you pass away before reaching retirement age, the capital contributed to the first pillar pension remains in the possession of the state.
2nd pension pillar: according to current legislation, 6% of the income subject to social contributions goes into this pillar every month. Unlike the first pillar pension, real money, not virtual, is accumulated here, which you can entrust to a manager of your choice by joining one of the pension plans they offer. The manager's task is to invest your money in stocks, bonds, and other financial instruments to grow your pension capital and, consequently, your retirement pension.
Unlike the 1st pillar pension, you can bequeath the capital of the 2nd pillar according to the procedures provided by the Civil Law or add any person of your choice to the accumulation of the 2nd pillar. This way, your savings will benefit someone close to you.
You can submit an application for bequeathing 2nd pillar pension savings on the portal www.latvija.lv, aizpildot by filling out an electronic form , or you can visit a branch of the State Social Insurance Agency in person. You can also send the application by mail or email, signed with an electronic signature.
However, if it happens that you pass away after just a few years of receiving your pension when payments have already begun, regardless of your choice regarding the 2nd pillar pension capital, this capital will be credited to the state budget. If you don't want this to happen, it makes sense to consider the option of obtaining a lifetime pension insurance, because it will give you more control over the use of your 2nd pillar pension savings both during your lifetime and after your death.
3rd pension pillar: this is a private voluntary pension scheme into which you can contribute any amount of your choice monthly to build up pension savings. Contributions to the third pillar pension can also be made by your employer if there is an appropriate agreement in place. Similar to the 2nd pillar pension, the money contributed to the third pillar pension can be inherited and belongs to the person who accumulated it. Additionally, you can specify individuals in the contract who will receive this capital in a simplified manner, thus ensuring that this money doesn't go to waste.
It's important to make a timely decision about bequeathing your pension savings and ensure that the savings you accumulate over your lifetime can benefit your loved ones if you are unable to fully utilize them in your retirement years. Act wisely and plan ahead for your future!
