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The second pillar funded pension is the main addition to the state pension. The 2nd pillar is collected so that 2% of your wages are directed to your personalised pension account. The state adds 4% of your current social tax payments.
The state pension together with the second pillar ensures you a pension that is 40-50% of the income you earned before retiring.
If you are a young person only entering the labour market, the second pension pillar is mandatory for you. You can choose your own pension provider and fund. But if you do not choose it by yourself, you will be randomly assigned a fund when you start work. This way, you may not have the fund that is the most suitable for you.
If you were born in 1974 or later, you can join the 2nd pension pillar only until a specific date:
| Your year of birth | You can joint the 2nd pillar until |
| 1974-1976 | 31 October 2008 |
| 1977-1979 | 31 October 2009 |
| 1980-1982 | 31 October 2010 |
If you delay in joining, you cannot join the second pillar later. This is why it is not reasonable to leave insuring your old age to the last minute.
ERGO offers two different second pillar funds that differ in their potential risk and yield. These are ERGO Pension Fund 2P1 (formerly ERGO’s Stable Pension Fund) and ERGO Pension Fund 2P2 (formerly ERGO’s Future Pension Fund).
ERGO Pension Fund 2P1 (formerly ERGO’s Stable Pension Fund)
If you choose this pension fund, 100% of your money will be directed to bonds and deposits. It is safe to invest into bonds, so the fund has a lower risk, but also lower yield.
Choose this pension fund if you wish to preserve your pension assets and not have them fluctuate to a significant degree. This fund is especially recommended if you have seven years or fewer until your pension.
ERGO Pension Fund 2P2 (formerly ERGO’s Future Pension Fund)
If you choose this pension fund, half of your money will be invested in bonds and the other half in shares. It is riskier to invest in shares than bonds, but shares can earn a higher income in the long run.
The Future Pension Fund is suitable for you if you wish to receive a higher pension and are ready for a short-term moderate fluctuation in the value of the fund units. This fund is suitable for you if you have more than seven years until your pension – this way, there is plenty of time for the income earned from shares to accumulate.
When choosing a fund, you should assess your risk tolerance, age, investment strategy and yield of the fund. When making a choice, you can always consult an agent from ERGO.
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