The aim of the 2nd pillar pension plans is to help you secure a better retirement pension, not only by saving, but also by investing in the financial and capital market – securities and bank deposits. Therefore, the accumulated capital works for you and helps to increase your pension.

Over the years, there may be thousands of euros accumulated in your 2nd pillar pension account. However, since this money is not immediately available, many people are not interested in its fate and do not know that they can also have certain influence on it.

To help you better navigate the issues of managing the 2nd pillar pension, we have gathered the key facts that people most often do not know.

1. Part of your mandatory social contributions is transferred to the 2nd pillar pension

Every month, 5% of your gross salary or other income from which mandatory social contributions are paid is transferred to your 2nd pillar pension plan, regardless of which fund manager you have chosen. How well these funds will be managed and will be growing, depends on which plan you have joined.

2. You can keep track of how quickly your retirement savings are growing

You can find out the current data on the accumulated 2nd pillar pension capital by requesting an account statement on the State and municipalities government portal www.latvija.lv or by arriving in person at any division of the State Social Insurance Agency. In the statement you will see both how much you already have saved and how much this saving has earned for you. Learn how to read and how to read and understand 2nd pension pillar participant’s account statement.

3. You can compare the results of different 2nd pillar pension plans

If you want to see how well your 2nd pillar pension plan is doing compared to other similar plans, go to the portal www.manapensija.lv, where you can evaluate historical data on performance in different periods. Note that the performance (profitability) of the plans are indicated already after the withheld commissions.

4. Commissions vary from one asset manager to another

The commission fee rate for managing your pension funds can partially impact the size of your accumulated savings, so when choosing among asset managers, it is important to take into account the amount of these fees. To find out the management costs of various pension plans, visit manapensija.lv, find the 2nd pillar pension plan of interest and open the file "Basic information for participants", where you’ll find all the basic information about the pension plan concerned, including the cost ceiling and the actual costs withheld in the previous year.

For example, for the management of Signet Active Plan, a commission of 0.6% per annum is deducted from the average value of the assets of the investment plan, which includes remuneration to the manager of the funds and remuneration to the custodian bank. The variable part of the remuneration is not applied, so it is in the interest of the managers of Signet Pensiju Pārvalde IPAS, as well as in the interest of the plan participants to increase the value of the investments in long-term perspective.

5. You can choose who you will entrust your 2nd pillar pension capital to

You can change the manager of funds of the 2nd pillar pension once per calendar year, and you can change the investment plans within each manager of the funds twice per calendar year, although it is not be advisable to change them so often, because the performance can only be evaluated in the long-term perspective.

The easiest way to change the manager of the funds and the investment plan of the state funded pension scheme (2nd pillar pension) on the portal www.latvija.lv: select the type of the authentication, confirm your consent to the electronic service regulations and fill in the application to select or change of the 2nd pillar pension plan.

6. Changing the 2nd pillar pension plan is free of charge

The fee for changing the pension plan is not applied, and the pension capital remains in its current amount, so when you change your pension plan, you don't lose anything right away, yet you don't gain anything immediately either. You will be able to assess whether the profitability of the pension plan meets the expectations of it only after some time, as this will be reflected in the increase in your pension savings.

7. You can assign the capital accumulated in the 2nd pillar pension to the inheritance

In order to preserve your accumulated pension capital in case you never reach the retirement age,, you can choose what will happen to your pension capital. As a member of the 2nd pillar pension plan who has not yet requested a retirement pension, you can fill in an application on portal latvija.lv (or do it on paper at the State Social Insurance Agency branch) and indicate who will inherit the capital accumulated in your 2nd pillar pension. In this form, you will be offered three options. To make a wise decision, check out what each of them means.

We hope this article gave you a better understanding of the possibilities of managing and evaluating the 2nd pillar pension plan. If you want to learn more about Signet Active Plan, go to this section.