SEB-Active 3rd Pillar Pension Plan Review 2020

Updated: 30 May, 2020 seen 55

I opted for a 3rd pension pillar pension plan at SEB bank Latvia back on May 22, 2019. I've been saving additional funds for the old age for already one year. Time flies. 

On the day, when I opted to save for old-age,  my dad turned 65. Kind of average age in Latvia for retirement. Unlike me, dad was a saver, and he saved with SEB bank Latvia 3rd pillar pension plan. I'm saying - he was. Dad passed away not reaching his 66. 10 days short. 

I started small, saving EUR 33/mo (May, June, July, August) for the first 4 months, then increased it to EUR 43/mo (September, October, November, December) for the next 4 months, and finally increased monthly contributions to EUR 58/mo (January, February, March, April)

SEB Active Pension Plan 2019-2020

SEB Active Pension Plan 2019-2020

In total, I have contributed EUR 536  (average EUR 44.66/mo) to the pension fund.

In my first year with SEB Active pension plan, I 've lost EUR 27.79 or -5.18%. Taking into consideration the downturn because of the Covid19, I find this quite a good result. My other investments have been down - 30-40%. A 5% drop is quite an acceptable result.

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 20year to go. 20 years is plenty of time to build up some serious wealth.

My savings at 3rd pillar pension fund at the end of April 2020, took about 3.28% from my total savings.

If I would continue to average out about 530 EUR per year in my 3rd pension pillar, I might save (no value growth calculated)

  • by 2040: EUR 11,130
  • by 2045: EUR 13,789

But, at least for next year, I do plan to increase my contributions to the 3rd pillar pension fund as follows:

for the next 4 months (May, June, July, August) EUR 78/mo, then for the next 4 months (September, October, November, December) EUR 88/mo and for the next 4 months in 2021 (January, February, March, April) EUR 108/mo. For the next 12 months, I'm looking to save for my old age an additional EUR 1,076 (double I saved in the first year). 

When talking with dad, I always had this idea, that on average we should save about EUR 5,000/year (for 30/40 years) to have a decent supplement in the old age. I'm sad my dad won't see this happen, I enjoyed a lot talking with him these topics, like savings, average pension, minimum wage e.t.c

What could we buy for EUR 508 in 2020? Ask me, I will tell  - buy 100 shares of INGA stock at Amsterdam Exchange and sell covered calls to generate extra income. See: Covered Call on INGA - Potential income return 4.09% in 4 days

EUR 508 in 2020 equals about one month rent for apt here in Tbilisi, or this is the money I'm paying monthly for our daughter's preschool and nanny.