Pension Insurance+

What is Pension Insurance+?

  • Pension insurance+ is insurance contract for supplementary funded pension where contributions are invested into funds.

    The value of the contributions made into the insurance contract may go down as well as up depending on the changes in the prices of the securities used as the underlying asset. What makes the Pension Insurance+ contract unique is the guarantee.

    Rate your risk tolerance before you sign the contract.
    The money paid into Pension Insurance+ is invested in funds whose yield is not guaranteed. This is why it's important to assess whether the service and the underlying assets are a match for your risk tolerance before you sign a Pension Insurance+ contract. We want our clients to consider all aspects of the contract before they sign it and advise them to rate their risk tolerance here before they make their decisions.

    Pension Insurance+ is suitable for clients who are prepared to take higher risks during the savings period in order to achieve a higher yield and who accept major fluctuations in the saved amounts, especially in the initial stage of the contract.

    Pension Insurance+ is not suitable for clients whose risk tolerance is very low. You should also think twice before you sign the contract if the savings period is very short.

  • The guarantee ensures that even if the investments made into Pension Insurance+ have lost most of their value, you will get pension money where contract fees are the only amounts subtracted.

    Guarantee does not apply to the money paid into the Fund if the contract is terminated early.

    Pension Insurance+ guarantees that the amounts invested by you can only reduce to a certain extent if the performance on the funds is negative. In the case of a significant fall of the markets where the underlying asset of the contract may lose the majority of its value, the saving for retirement money paid out after the maturity of the contract can only be reduced by the amount of the contract fees. The guarantee does not apply to the money paid into the Fund if the contract is terminated early.

    Example 1:
    The total contract fees (administration fees, insurance cover and guarantee fees) of a 15-year contract with regular monthly contributions of €30 and an average yield of ca. -2% amount to ca. 11% of total contributions. This means that the amount paid out after the maturity of the contract is 12-13% less than the contributions made by contract owner.

    Example 2:
    The total amount saved in the case of a 25-year contract with regular monthly contributions of €30 and an average yield of 5% per year is approximately 59% higher than the sum of contributions and the guarantee is not applied.

    Example 3:
    The total amount saved in the case of a 25-year contract with regular monthly contributions of €30 and an average yield of -5% per year is approximately 52% lower than the sum of contributions and the guarantee is applied when the contract expires. The amount paid out to the contract owner is approximately 13% lower than the amount paid by contract owner into Pension Insurance+ (the contract fees for the insurance cover and the guarantee are subtracted from the contributions). The remaining loss made on the investment will be borne by the insurance company.

    Example 4:
    If the yield on the underlying asset is similar to the extraordinary conditions during the deep recession of 2008-2009, the sum of the amounts regularly paid into the contract over a year may decrease by 36% solely due to the yield on the underlying assets. The guarantee is not applied in the event of an early termination of the contract and the policyholder bears the loss caused by the decrease in the value of the assets.

  • Funds chosen according to term.

    You don't have to worry about the selected funds or about changing them – we take care of that. During the time when you save money in Pension Insurance+, the allocation of equity and bond funds is changed automatically in accordance with the time left until the maturity of the contract. Most of the money is paid into equity funds at the start of the contract and the share of bond funds increases as the maturity date of the contract gets closer. Investment risk will decrease over the years, as the proportion of conservative asset classes is gradually increased until they are in the majority at the maturity of the contract.

    Risk and yield usually go hand in hand. It is impossible to set earning the biggest possible income as your goal and also rest assured that the value of your investment is not going to go down at some point. The purpose of an allocation of equity and bond funds that changes in time is to achieve optimal balance between the investment risk and the expected yield in consideration of the duration of specific contracts. The prices of equity fund units may fluctuate considerably, as they reflect the situation in global economy and the performance of companies. This is why their proportion in the contract is the biggest in the initial stages. Bond funds invest in government bonds, and they are seen as less risky than equities.

    Investment strocture

    Equities refer to a fund that invests globally in world economy. It covers the stability of developed regions and the growth potential of emerging countries, which means that the performance of the fund is more stable during certain economic cycles.
    Mid-term bonds refer to a fund where the value of units reflects the average yield or index of 5-7-year bonds of the eurozone.
    Short-term bonds refer to a fund where the value of units reflects the index of 1-3-year bonds of the eurozone.

  • You can pay money into the Fund with a monthly direct debit or at the time and in the amounts that are suitable for you.

    Contributions to contract performed on a regular basis are the most advantageous and certain way to grow your pension assets. Neither contribution fee nor other transaction fees are charged on contributions. Paying by e-invoice standing order agreement, no remittance order fee is also added.

    Saving regularly reduces the so-called wrong timing risk, i.e. the risk that units are purchased for a large amount of money at a time when the prices are not good. Even experienced investors find it difficult to enter a fund at the best time or to find the moment when the prices of fund units are the lowest. Investing regularly gives you the opportunity to buy fund units when the markets are up or down, which generally gives you a better average purchase price than one-off investments. It also helps to sustain the price decreases of fund units better.

    In addition to regular contributions, you can perform single placements. For this purpose, you should certainly add to the remittance order also the reference number of the contract.

    As of 2012, contributions to your pension contract can also be made by the employer (employer's contributions are exempt from the fringe benefit tax).

  • State supports collecting retirement money with tax incentive.

    The state supports saving money in the third pension pillar, and therefore your contributions to Private Pension Portfolio Insurance contract in the amount of up to 15% of your annual revenue will be exempt from income tax. The income tax of 20% will be refunded to people saving for retirement based on tax return. The upper limit of tax exemption 6000 euros per year is in force from 01.01.2012.

    For example, if your gross salary is 6 500 euros per year and you have made the contributions of 600 euros during the year, you can apply for refunding the income tax in the amount of 120 euros.

  • Good overview of contract in the Internet Bank.

    If you have any questions, please call our Investment Helpline on 613 1606 (from 8:30 am to 6 pm on business days). The Investment Helpline will also help you if you want to modify your Pension Insurance+ contract.

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Frequently asked questions

  • Can I change the allocation of the investment between equities and bonds?

    You cannot change the allocation yourself. During the time when you save money in Pension Insurance+, the allocation of equity and bond funds is changed automatically in accordance with the time left until the maturity of the contract. Most of the money is paid into equity funds at the start of the contract and the share of bond funds increases as the maturity date of the contract gets closer.
  • How can I terminate the contract and how much would it cost me?

    Pension Insurance+ contract can be terminated at a bank branch or using the Internet bank. To terminate the contract using the Internet bank, you should first call the Investment Helpline, phone 613 1606, or contact them by the e-mail address investeerimistugi@swedbank.ee. You will have to pay a service charge of 1% of the disbursement, but no less than 20 euros, upon the termination of the contract if the termination application is submitted when less than five years have expired from the entry into the contract. When five years have already expired, no service fee shall apply upon termination of the contract. In case of the early cancellation of the contract, the market value of the fund units is disbursed, i.e. the guarantee is not effective then.
  • What do I have to do if I want to stop making regular contributions to my Pension Insurance+ contract?

    You can terminate the regular payment schedule in the Internet Bank. Find the option under your Pension Insurance+ contract by going to Property and life insurance->My contracts->Pension Insurance+->Amendments->Amend method of payment. After you cancel regular payments, you can carry on contributing to the contract by making payments in the amounts and at the times that are suitable for you.
  • What should I keep an eye on myself during the saving of the pension assets? Do I also have to change anything during this time?

    The most important aspect is to monitor that the contributions to pension assets would conform to your revenue. Based on the studies, to maintain the established standard of living the person's pension should amount to ca 65-70% of the revenue. Provisionally, the state pension and mandatory funded pension in total provide approximately half of the person's monthly revenue preceding the retirement. It is recommended to save in the third pillar around 10% of the revenue.
  • Can I insure my life with the Pension Insurance+ contract?

    Pension insurance+ is insurance contract for supplementary funded pension and in case the contract owner dies, the disbursement shall be actually made to the beneficiary indicated in the contract. The amount to be disbursed is the accumulated pension assets, to which the insurer adds 2% (based on the law the minimum amount disbursed in case of death is 102% of the value of the accumulation reserve). As the objective of the contract is still to accumulate the pension assets, it is impossible to agree on a higher insurance cover in this contract. If you wish to provide your family with greater assurance, we recommend choosing a suitable solution from among the insurance opportunities offered by Swedbank. Read more about these options in the Internet bank under "Property and life insurance".
  • How do I know that this contract will help me achieve my savings goals?

    The money paid into Pension Insurance+ is invested in funds whose yield is not guaranteed. This is why it's important to assess whether the service and the underlying assets are a match for your risk tolerance before you sign a Pension Insurance+ contract. You can assess your risk tolerance before you sign the contract and you can also do it here any time you wish.
  • How does Pension Insurance+ differ from the earlier Pension insurance into Funds?

    - The allocation between equity and bond funds is changed during the contract according to the time left until its maturity. At the start of the contract the fund invests mainly in assets that are riskier and have a higher expected yield, but the investment risk is reduced over the years. This is done by gradually increasing the share of conservative assets until they are in the majority at the maturity of the contract.

    - Unlike the earlier contracts, we no longer offer a broad selection of funds with the resulting opportunity to opt for a higher risk than you realise.

    - We have added the guarantee, which ensures that if the underlying asset of the contract loses the majority of its value, the saving for retirement paid out after the maturity of the contract can only be reduced by the amount of the contract fees. Read more here.
  • What should I do if I have invested in the earlier Pension insurance into Funds?

    We advise you to fill in Swedbank's risk questionnaire, compare the result with the investment strategy and service selected by you and make changes if necessary. The clients who have combined an individual portfolio on the basis of a wider selection of funds, but who would rather prefer managed solutions, should evaluate the suitability of the existing solution. Such clients can update the selected product terms as a whole and continue saving in the new Pension Insurance+. The terms can be amended free of charge. If you need further information, call the Swedbank Investment Helpline on 613 1606 or send an e-mail to investeerimistugi@swedbank.ee.

Pension Insurance+ is a unit-linked life insurance contract where the investment risk is borne by the policyholder. Investment risk means that the yield earned or the loss incurred by the policyholder on the contributions made into the insurance contract depend on the performance of the underlying assets of the insurance contract and the changes in its market prices. The value of the contributions made into the insurance contract changes in time according to the changes in the market value of the financial instruments that are the underlying asset of the insurance contract.
The payout at contract maturity equals the biggest of: value of savings (value of underlying assets minus contract fees) at that moment or the guaranteed amount (total sum of contributions minus contract fees).
Please read the terms and conditions of the contract and the price list before you sign the contract and consult an expert if necessary. Pension Insurance+ is offered by Swedbank Life Insurance SE.

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