Occupational pension

A way of diversifying your employees’ incentive packages

  • Contributions to the 3rd pillar help to secure an employee's future.
  • 3rd pillar contributions are not subject to income tax.*
  • Contributions can be made by both the employer and the employee at the same time.

*The tax-free threshold on 3rd pillar pension contributions forms up to 15% of the payments subject to income tax made to employees but no more than 6,000 euros per calendar year.

Important facts for employers
  • No income tax is charged on contributions to the 3rd pillar. You do, however, have to pay social and unemployment insurance tax and make payments to the mandatory funded pension fund on any contribution you make.
  • Prior to calculating the income tax withheld, the tax-free part of the 3rd pillar payments made on behalf of the employee is deducted from the amount specified. The tax-free threshold on 3rd pillar pension contributions made in one calendar year forms up to 15% of the payments subject to income tax made to employees but no more than 6,000 euros per calendar year.
  • Account of the tax-free threshold is kept by the employer in total as of the beginning of the calendar year.
  • The employer must submit to the employee (and the Tax and Customs Board) a separate report on contributions to the 3rd pillar: TPS form (Certificate of supplementary funded pension insurance premiums paid on behalf of the employee and amounts paid for the acquisition of voluntary pension fund units)
Important facts for employees
  • The tax-free threshold on the 3rd pillar applies to contributions made both by the employer and the employee.
  • Upon accounting for the tax-free threshold, the Tax and Customs Board first calculates the contributions made by the employer.
  • As the employer does not pay income tax on such contributions, this is not refunded to the employee.
  • The tax can be refunded to the employee only from contributions made by them. This requires them to declare the contributions on their tax return.
  • When submitting your tax return, you can only deduct from your taxable income the part of the tax-free threshold on 3rd pillar contributions that remains unused by the employer.
    For example, if your annual gross income is 18,000 euros, the tax-free threshold is 2700 euros (i.e. 15%). If the employer has made contributions to the 3rd pillar in the amount of 1800 euros by the end of the year, the employee can declare their own contributions in the maximum amount of 900 euros, from which they have the right to be refunded.

How to get started?

  1. An employer can make contributions to an employee’s supplementary pension funded insurance contract or purchase voluntary pension fund units for an employee’s securities account.
  2. The amount of the contribution of the occupational pension is decided by the employer. This may be a certain percentage of their wages or a fixed amount. Another option is for the employer to add their part to the contribution paid by the employee.
  3. In order to start making contributions, the employee must choose a 3rd pillar solution suitable to them (unless they already have one) and forward the necessary information to the employer.

    • The necessary details for purchasing voluntary pension fund units are specified in the respective fund prospectus. The employer must also submit to the employer the number of their securities account (the account that will be used to purchase the units). If you have any questions, contact investment support.
    • In order to make contributions under a supplementary pension funded insurance contract, you need to submit the business name, account and reference number of the service provider and any other important information as needed (e.g. the minimum amount of the payment according to the contract).

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