Why would I need an optional pension?

The principle of optional pension is to entrust someone to manage, multiply and return your money to you at old age in the form of a monthly pension. When you no longer receive a monthly salary, this additional pension can help you cover your healthcare expenses, vacations, gifts for grandchildren and all the other things you want, or need. All the more reason to weigh the savings plan for old age very well.

Optional pension is a long-term savings product through which you can accumulate more money in your individual pension account. Money is managed into an account of yours and to which you have permanent access. You can opt out of making new contributions, pause and/or resume payments. Participation in an optional pension fund involves a monthly contribution of between a minimum amount (set by each optional pension fund) and a maximum of 15% of your gross salary income for at least 90 months (not necessarily consecutive). After each payment of the contribution, the money is converted into fund units which are highlighted in an individual optional pension account. The number and value of the fund units held by a participant in the optional pension shall determine the value of his or her net personal assets. The value of the net personal asset fluctuates daily, depending on the value of the fund units. Unlike the public pension, the optional pension can be collected from the age of 60.

The optional pension helps you to immediately benefit from a tax advantage. This way, you can earn an extra income for retirement years while paying a lower tax. Sounds good, doesn’t it? All you have to do is make the payment of your monthly contribution through your employer. Only then will you be able to benefit from the benefits of tax deductibility. For the employer the effort is quite small, because he calculates and retains all taxes related to wages anyway, and you benefit:

• Up to a maximum contribution of 400 Euro per year, you can immediately pay a lower income tax according to the provisions of the current Tax Code;
• Stop worrying about monthly payment of the contribution;
• The higher your monthly contribution (relative to the minimum contribution of a few tens of lei per month), the greater your tax advantage (within the limit of 400 Euros per year) and your individual pension account accumulates more money;
• You can make the most of your tax advantage by choosing the optimal contribution;
• You can earn even more money into your individual pension account if your employer also contributes to your optional pension in the form of extra-wage benefit.