Young people who are still far from retirement usually do not pay attention to what happens to their future pension. Thoughts are more focused on entertainment, enjoying life and meeting current needs. The idea of a retirement pension is only when the retirement age is almost over, but it becomes clear that the current accumulated pension will not be enough to survive. In order for you not to have it, you have to start thinking about your pension early, so here are some helpful tips to help you increase your future pension without significantly reducing your current quality of life.
1. Pay taxes
No matter how wrong it is, nowadays many choose to work without a contract or get a lower official salary than the real one. This is done with the aim of avoiding tax and the money that is saved in this way could be received immediately. People think that in this way they save, but in fact they are self-conscious. In this way, social contributions are reduced or not at all, so savings are not created at any pension level, or very slowly. For people who receive wages in envelopes, the pension will be very small in the future or not at all. Nor should we believe that our state pension system cannot be trusted. The three-tier pension system is one of the most modern and, although demographic challenges are a concern for future pension levels, one must understand that those who have not made social contributions will be the most affected anyway.
2. Regularly monitor your savings at 2nd pension level
Research shows that the majority of the Latvian working age population does not know what their 2 nd level pension manager is and what is the second pension plan. Such things seem to be irrelevant to many, as it is believed that the 2nd pillar pension plan and the plan managers do not have any significant impact. Many believe that everywhere the benefit is about the same, but it is not. The amount of the pension is greatly influenced not only by the amount of contributions but also by the manager and the pension plan chosen, so keep a close and regular eye on what happens to your 2nd pension level and compare your chosen plan and manager with others. Perhaps it would be more profitable for you to change them to make the savings increase.
3. Do not change the 2nd pillar pension plan lightly
Nowadays, various promotions offered by 2nd pillar pensioners are very popular. For example, switching to another pension manager allows you to get a movie ticket, a gift card, or some other little thing. In order for the potential customer to agree, it is further noted that their pension plans are the most profitable and with the greatest increase, but no specific numbers or facts are mentioned. Not knowing the true meaning of the 2nd pillar pension and the amount of the pension, people are willing to accept such a share, but they do not even know that the loss can be as many as thousands. Over the lifetime of the 2nd pension level, very large sums of money are accumulated on average and, depending on the selected pension fund maintainer, the amount of savings can vary from a few tens to several thousand euros. If you want to change your 2nd pension level, first make sure that it will be more profitable for you.
4. Use Lifetime Pension Insurance
Lifetime pension insurance is a relatively new service that many are not really familiar with, but it is very useful. Lifetime pension insurance requires that the amount paid at the 2nd pension level is not necessarily monthly, along with the guaranteed pension, but when the pensioner wants it. This means that he has the opportunity to manage his accumulated capital at his own discretion. Another important benefit of this insurance is that using it, the money accumulated at the 2nd pension level can be transferred to the inheritance rather than being credited to the state budget, as is the case if the pension has not been insured.
5. Engage in 3rd pension level
It is also very important to be involved in the 3rd pension level, or to make contributions to the private pension fund. As in the 2nd pension pillar, Level 3 money is also invested in various financial instruments that make up its growth in the future. An important advantage of the 3rd pillar pension is that this money can be paid out before retirement, and it is possible to inherit this money. Many are not involved in 3rd pillar pension because they think that they have to pay a very large amount of money, but it is not. It is enough to make a substantial increase in the amount of the pension with 20 euros per month, and the contributions to the 3rd pension pillar are added to the eligible expenses, so it is possible to return a part of the amount paid each year when submitting the tax return.