Accumulating a pension in the Second Pillar has become voluntary. These changes provide the following new options for those accumulating pensions:
1) people have been given the right to decide whether to accumulate pension money into the Second Pillar or not – for both those who have already enrolled in the Second Pillar when the changes enter into force, as well as for those who have not;
2) in addition to accumulating money in pension funds, money can be accumulated via pension investment accounts;
3) people have been given the right to use the money accumulated in the Second Pillar under certain conditions while they are still accumulating their pensions;
4) upon reaching retirement age, each person will be able to decide how to use the accumulated money.
5) During the accumulation of one’s pension, income tax must be paid when withdrawing money from the Second Pillar, at a rate of 20%. The income tax will be withheld by the Pension Centre, who will make the payment. When a person has reached retirement age, the Second Pillar payment is taxed at an income tax rate of 10%. However, if a person of retirement age enters into a lifetime pension contract with an insurer, such payments are not subject to income tax.