Private Pensions – Number of contributors reaches 28 thousand

The number of Albanians who are paying for a private pension has reached more than 28,000. According to data from the Financial Supervisory Authority, last year the number of contributors increased by about three thousand individuals or 12% more than in 2018.

More than 60% of all contributors belong to the Credins Pension Fund. At the end of last year, the fund had over 17,000 members. Credins’ fund has achieved the best results in promoting the scheme to individual independent contributors, using the Credins Bank network. Meanwhile, Raiffeisen and Sigal rely heavily on professional schemes and business partnerships.

The market registered a high growth in volume as well, with total assets amounting to ALL 2.9 billion or EUR 23.5 million. Although it still occupies a modest share in the financial market, in recent years this segment has been growing rapidly.

Net assets for 2019 expanded by approximately 27%. In terms of asset value, the largest fund remains Sigal Pension, which held net assets of ALL 1.33 billion, or about 46% of the market.

At the end of 2019, the fourth private pension fund, Albsig Pension was also licensed, which shows a growing interest for the sector.

Increasing private pension schemes would have a very significant social and economic impact in the long run, reducing the pressure on the state social security scheme.

However, the incentives for raising these funds are still not very tempting. By law, these contributions are exempt from personal income tax up to 15% of gross annual income, but not more than ALL 200,000 per year.

The new law, introduced for public consultation by the Ministry of Finance, stipulates that the tax-exempt contribution will increase to ALL 240,000 per year.

The Albanian Financial Supervisory Authority (AFSA) had proposed for the private pensions, at the time of benefit, to be taxed only on the return on the investment, but not on the amount paid by the contributor. This proposal though, has not been accepted by the government and is not reflected in the draft law. This implies that private pensions will be taxed in full, to the extent provided by the personal income tax law.

SCAN

*Material i përgatitur nga portali SCAN. Ripublikimi mund të bëhet vetëm kundrejt citimit të autorësisë dhe burimit origjinal.