A voluntary pension fund is a type of investment fund that serves to collect voluntary pension contributions and invest them to achieve a return on the money invested and ensure the later payment of private pensions.
In the market of voluntary pension funds, at the end of the third quarter of 2020, four management companies were operational that managed the assets of seven voluntary pension funds, one custodian bank, five intermediary banks and one intermediary insurance company.
State pension systems are becoming weaker and weaker due to reforms based on current funding and there is a tendency of reducing state pensions, which may be continued in the forthcoming years.
The role of voluntary pension funds is to overcome the poor outlook of state pension funds and provide citizens with a decent income in old age.
Savings in the voluntary pension fund are not linked to the existence of the user's employment relationship. It is also possible for an unemployed person to pay contributions to a voluntary pension fund from some other incomes. Fund member does not even have to be the person paying the contributions. For example, employers can make contributions for employees, spouses can make contributions for each other, or parents can make contributions for children who are not yet employed.
Should an employer be paying a monthly contribution to the voluntary pension fund for employees, he is going to pay neither income tax nor contributions up to 3,000 dinars per month. This is a more favorable option for users, because if they were to pay contributions independently of the employer, they would be additionally taxed. Therefore, it is an excellent option to make a deal with the employer about paying contributions to voluntary pension funds instead of part of the payment for personal income. Any home or foreign natural person can be a member of the fund. It is possible for one person to be a member of several voluntary pension funds. One becomes a member of the fund by signing the Membership Agreement.
The investment unit shows the value of the funds invested in the fund by multiplying the number of investment units you own with the value of the investment unit, published on daily o basis by the fund on its website and in one daily newspaper. The value of the investment unit is also an indicator of the yield that the fund achieves. The higher the growth of the investment unit of the fund, the higher the value of the private pension of its members.
Withdrawal of funds from the voluntary pension fund shall be possible from the age of 58 on and until the age of 70 at the latest. Prior to the age of 58, extraordinary withdrawal of funds is possible only in case of permanent incapacity for work, and not in case of extraordinary medical costs and expenses. It is only possible to withdraw up to 30% of the accumulated funds at one time.
For all those who became beneficiaries-members of the fund before May 17, 2011, the withdrawal of funds from the voluntary pension fund shall be possible from the age of 53, and until the age of 70 at the latest. Prior to the age of 53, extraordinary withdrawal of funds is possible only in case of permanent incapacity for work, and not in case of extraordinary medical costs and expenses. Unlike new members, they can withdraw 100% of accumulated funds at one time.
Funds can be withdrawn in several manners:
- by one-time pay-out,
- by purchasing an annuity from an insurance company,
- by programmed payment
- by a combination of these three ways.
A one-time payment implies the withdrawal of funds in one payment, when you issue an order for this to the fund management company. Capital gains tax shall be paid on the paid-up amount, which currently amounts to 15%.
For more information on voluntary pension funds, asset values and daily changes, see the following website: https://www.kamatica.com/investicije/penzioni-fondovi