Did you know that you can change the manager of your 2nd pillar pension funds once per calendar year, and change the investment plan within each fund manager’s offer – twice per calendar year? And changing the pension plan is free of charge.
This allows you to be quite flexible in your choice of the funds’ manager and the choice of the pension plan suitable for your age and long-term goals.
Currently, in the register of the state funded pension scheme fund managers there are seven managers of 2nd pension pillar funds registered. Each of them has one or more investments plans, in total amounting to more than 25 options.
The SSIA statistics on 2nd pension pillar investments in various pension plans in 2023, tens of thousands of Latvian residents have invested their pension savings in plans that are not appropriate for their age, which can significantly reduce the size of their future pensions. According to this information, many young people have joined conservative plans, which are characterized by lower risk, usually accompanied by lower chances of achieving high returns.
However, if you still have decades to live to your retirement, it is recommended to choose an active planwhich will allow you to accrue more capital through higher yield. And if you have less than 10 years left till your retirement, choose a lower risk pension plan, because right now for you it is more important to save what has been already accrued, worrying about the higher profits less. Learn more about how to navigate through the offer of 2nd pillar pension plans in article:“How to compare the second pillar pension plans wisely?”
Starting from 1 July 2024, the State Social Insurance Agency will provide pension managers with data about the participants in their pension plans. This will give the managers the opportunity to personally reach out to and advise their clients, recommending the most appropriate pension plan for their age.
Pay attention to the historical performance of your pension funds’ manager. Even though the historical performance does not guarantee the same yield in the future, yet seeing the manager’s performance over the years, one can have a clear perspective of how the manager has been overcoming various market situations – both crises and growth periods.
Do not change your pension plan to a conservative one, for example, just because there is a crisis in the economy, and you are trying to mitigate risks. It is a very common mistake. The procedure of changing the pension plan can take up to 2 weeks, so by the time it is completed, the performance of both your old and new pension plan may have changed – one may start growing, while the other one might be facing a recession. In the long-term perspective, the return is usually higher than losses, because every economic crisis is followed by a growth phase. So, when a crisis starts and you see stock market indexes going down, stay calm, don’t make rash decisions.
You can find out which asset manager is managing your 2nd pension pillar capital by going to www.latvija.lv and opening page “SSIA Information and Services”. If you want to change your asset manager, select the online service"Choice or change of 2nd pension pillar investment plan".