Pensions, second or third pillar? - Details of the new scheme being drafted by the government
"We are preparing a new pension scheme. Giving people who want to save more for their pensions the opportunity to make a contribution, which the state will match with the same amount. So, if someone takes one euro out of their salary for their pension, the state will put in another euro. This will make two euros and, of course, this will be combined. The pension fund will begin to take shape and guarantee both those who invest in the fund, but also the connection between the private individual and the employee", said Prime Minister Edi Rama.
But what are the elements contained in the new pension scheme, is it the second pillar much sought after by private companies or the consolidation of the third pillar?
Official sources from the Ministry of Economy inform SCAN TV that the new scheme is related to the consolidation of the third pension pillar. The third pension pillar in Albania refers to voluntary private pensions and operates under the law on voluntary private pension funds.
Currently, the third pillar is a voluntary savings scheme where individuals deposit money into a private pension fund to create additional income when they retire. It is not mandatory, administered by licensed management companies and supervised by the Financial Supervisory Authority (AMF).
But the changes to the scheme initiated by the government are intended to initially affect state administration employees, who are encouraged to contribute a certain percentage of their salary to this scheme, with the rest covered by the state budget.
The draft is in its early stages and the percentage for each party has not yet been determined. For employees in the private sector, international practices are being taken into consideration to encourage them to contribute to the third pillar.
This contribution eases the burden of the public pension scheme on the one hand and on the other hand guarantees more income and well-being for citizens when they reach the age of benefiting from contributions.
The government expects the scheme to be ready by the end of this year.
How does the third pillar currently work? Individuals pay periodic monthly or discretionary contributions. The money is invested by the fund in financial instruments (treasury bills, bonds, etc.). Savings grow over time from contributions and investment earnings. When the individual reaches retirement age, he or she can receive a monthly pension payment, or withdrawals according to the fund's scheme.
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