On May 22, 2019, I opted for the 3rd pension pillar at SEB bank Latvia.

The main reason to sign up to this voluntary pension pillar is the hefty 20% tax refund once a year for the sums invested* (strings attached though)

For now, I have decided to start small and invest really small amounts of money to get my foot wet.

As I already have SEB bank Latvia account (I'm using it for holding Baltic stocks and getting dividend payments from the NASDAQ Baltic listed companies) it was not a brainer to signup for the 3rd pension pillar there

Here is what it's all about

  • Supplement your savings with amounts and at times you can afford – regardless of your income level
  • Contributions are invested to increase the value of savings in a long-term perspective
  • Obtain your savings starting from the age of 55

Now, regarding tax refund:

*You can get your personal income tax refund in the amount of 20% from the contributions made in 3rd pension pillar not exceeding 10% of your gross annual income (salary before taxes). You will receive the reclaimed amount on your current account, and you can redirect it to the existing savings by increasing the amount of your savings.

  • For 2019 I plan to invest EUR 304 (could claim tax refund 20% or EUR 60.8)
  • 2020 - EUR 876 (tax refund 20% or EUR 175.2)
  • 2021 - EUR 1536 (tax refund 20% or 307.2)

When planning retirement I'm looking on a healthy mix of savings instruments available, and 3rd pension pillar is just one of it - currently, I invest in high yield dividend stocks, peer to peer lending and even cryptocurrencies, which all combined already generates still humble, but the decent monthly income.

I believe 3rd pension pillar won't take more than 5-10% from my million dollar retirement savings account (which I plan to enter in 2045), on the other hand, the earliest I will be able to withdraw funds from a 3rd pension fund is in 2040 or 21 year to go. 21 year is plenty of time to build up some serious wealth.

 

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