Having a well-paid job is essential, and it is one of the reasons why many of us have worked in several EU countries. Financial management is also very important . We all know this and try to build up a financial back up, monitor our spending and avoid unnecessary purchases. But how often do we think about retirement and at what age should we start? Most importantly, how do we deal with retirement issues when we have worked in several countries?
In fact, the demographic crisis in Europe is nothing new – it started about 50 years ago. And when this is combined with an ageing population, the problem becomes even bigger. Simply put, the state pension system and occupational pensions (Pillars 1 and 2) are funded by taxes paid by employed people and employers. And with fewer people working and more people retiring, the system is no longer working as it should.
Of course, when the time comes, we will want to take the advantage of 1. and Pillar 2. Find out how you can get a pension if you have worked in more than one EU country. Unfortunately, these funds may not be sufficient to cover our needs due to the demographic crisis. And because of inflation, putting money under the pillow is far from ideal either.
Is investing on your own a good choice?
Investing is the most financially advantageous way how to save money. Unfortunately, investing comes with risks. The obvious one is that the price of the product or stock in which you invest can rapidly decline. Since 1987, the stock market has crashed seven times, and the intervals between these crashes are getting shorter. Moreover, given the current economic situation in the EU, you can never know if the platform you use for trading will go bankrupt and its assets (along with your money) will be frozen.
3rd pillar or supplementary pension savings
Many, if not most, EU countries have a system of supplementary pension savings. With few exceptions, it is voluntary. And it basically works like a savings account. If you sign up for such a scheme, a small amount of your salary goes into your savings each month. This way, without sacrificing too much, you can ensure that you have enough money when you retire. Unlike investing, it’s much safer and therefore the most logical choice.
What happens to my supplementary pension savings if I move to another EU country?
Firstly, you shouldn’t worry about signing up for a supplementary pension, even if you might move to another country. Although the rules and regulations are slightly different. In most cases you have several options. Many countries offer early withdrawal, transfer or other alternatives, which means it’s best to sign up as early as possible, which will lead to a higher pension.
Pan-European Personal Pension (PEPP)
The movement of people between EU countries is incredibly high. As early withdrawal or transfer of pension savings to another country is complicated, the PEPP was introduced. It offers everything what also the standard 3. pillar – or even more, while tackling the mobility problem. With a PEPP, there is no need of transfer, because one can invest in exactly the same product as invested in after moving.
PEPP complements existing national pension schemes and offers many advantages such as transparency and protection of invested capital. Transparency is achieved by providing relevant information as well as costs, charges and regular statements.
It will be offered by financial institutions such as investment companies, credit institutions, occupational pension institutions and others. However, these institutions will need a licence to ensure the security of their finances.
How does Atena react to this?
If you think about it, the easiest way to solve the retirement issue and have enough money to invest in supplementary savings, is that the employers would pay their employees more. That’s exactly what we do. Every quarter, we review the salaries of the health professionals who work for us, resulting in several increases per year! And our services don’t stop there. Whenever our clients need information, help or advice on pensions or retirement – whether it’s a standard or supplementary pension, we’re always ready to help.
In summary, there’s no better time to start putting money aside for supplementary pension savings than now. Moving to another EU country no longer interferes with your pension and you are free to travel – whether you just want a fresh start or are looking for a better job.
Are you already investing in a supplementary pension? If not, are you planning to start? Share your retirement planning with us in the comment section below.