What are the pension reforms in Slovakia? And how will it affect the income of pensioners?
✅ From July 1, 2023, the pensions of Slovak pensioners will increase by 10.6%. That is, the average old age pension will increase from 576 euros to 637 euros.
From 2024, payments will be increased every time pension inflation reaches 5% since the last assessment, except for the last quarter.
✅ From 2024, the retirement age will become a function of life expectancy, not a static number. That means it will increase by 1-2 months per year.
To make sense of other important changes, let us remind you – the old age pension in Slovakia is made up of 👇
📍 Compulsory insurance – payments to Sociálnu poisťovňu (state social insurance).
📍Compensatory – a personal pension account to which % of taxes are allocated. Of the 18% of mandatory contributions to Sociálnu poisťovňu, 5.5% now go to the personal account of the DSS (one of the pension fund management companies).
📍Voluntary supplementary insurance.
Since May of this year, the approaches for the second (funded) part, referred to as the second pilier, have changed dramatically.
✅ Enrollment in the second pilier has become automatic.
As soon as you make a tax payment to the Sociálnu poisťovňu, you will immediately enter the second pilier. This innovation is intended to increase your pension savings and enable you to have additional income in your old age. In essence, it is your investment.
You can choose which company (DSS) you want to conclude a contract with within 180 days. If you do not do so, the Sociálna poisťovňa automatically starts transferring funds to the DSS of your choice.
✅ Previously, it was no longer possible to join the second pilier after the age of 35. Now the possibility of joining has been increased to 40 years of age.
✅ The funds accumulated in the second pilier can even be passed on as an inheritance.
We hope that you are not confused and that we have managed to convey the complicated information in an understandable way!
