Forecasts show that the monthly income of current workers during retirement will fall significantly. To maintain a customary standard of living, it is important to build retirement savings at all three pension levels.
1st pension pillar - State guaranteed pension
1st pension pillar involves all social security contributors, and it works on the basis of the principle of generation solidarity. This money is being paid out to the current pensioners as their pensions, but the state guarantees that on retirement the basis of your pension will be formed by the tax payments of future workers.
The 2nd pension pillar is also constituted by social tax payments, but these contributions are accumulated directly for you and are not shared between the current pensioners. This allows you to create an additional capital to the State guaranteed old-age pension. If you are born in the period from 2 July 1951 until 1 July 1971, you may join the 2nd pension pillar on a voluntary basis. For everyone born after 1 July 1971, participation is mandatory.
3rd pension pillar
This is the pension level in which participation is completely voluntary. It is your private pension, formed by you or your employer. If you accumulate private pension capital, you will be eligible for personal income tax allowances. You will be able to receive your Private pension before the State pension, even upon reaching 55 years of age, and it is heritable.
