Questions & answers

No, there is no difference in the amount of funds allocated and paid as pension and disability insurance contributions by companies for the PDIF insured persons and the ones who are members of one of the Mandatory Pension Funds in the Second Pillar.

The main difference between the old pension system and membership in the first two pension pillars is actually in the distribution of pension and disability insurance contributions.

For persons who are not members of any Second Pillar Mandatory Pension Fund, the entire pension and disability insurance contribution in the amount of 18,8% of the gross salary is paid into PDIF, while for the members of the Second Pillar Mandatory Pension Fund, 12,8% of the gross salary is paid into PDIF, and 6% of the gross salary is paid into the Mandatory Pension Fund chosen by the insured person.

• A personal, i.e. individual account with funds which are not used for payment of somebody else’s pension, but are subject to inheritance.
• 6% of the gross salary that your employer pays for you (as a rate of contribution to the Second Pension Pillar) is paid to your personal individual account. These funds are not used for payment of somebody else’s pension, but represent your personal assets that you will use as part of your future pension. These funds are subject to inheritance in case of death of any member who has not exercised the right to an old age pension, which was not the case in the old one-pillar system.
• Possibility for higher pension.
• Your fundsare managed by professional and experienced personnel, investing them in safe financial instruments in accordance with the legislation, and ensuring security and generating yield on the funds invested, thus creating opportunities for the insured person’s pension to grow.
• Pension from two sources, ensuring greater security in retirement days.
• In terms of the individual, the reformed pension system, i.e. the two mandatory pension insurance pillars ensure greater security, since the financing of pensions will be made from two pillars.
• The part of the pension to be paid from the First Pension Pillar shall be calculated according to a predetermined formula based on salaries.
  The second part of the pension shall be paid from the individual account of the member of KB First Open Mandatory Pension Fund – Skopje. This combination of pension payment from both pillars shall ensure greater security for the individual in old age.
• Selectable way of using the accumulated funds. Upon reaching the right to retirement, you will be able to select the way of using, i.e. withdrawing your funds accumulated on your individual account, that is to choose from:
  1. Programmed withdrawals
  2. Annuities
  3. A combination of these options
• Complete insight into the balance of your funds
  Through the delivery of regular annual reports or statements on your request with regard to your individual account balance, you have a complete insight into the funds on your personal account. This increases the transparency of information on whether your employer regularly pays the legally determined contributions for pension and disability insurance. For the purpose of fast, simple and updated insight into the status of your account, KB First Pension Company enables the members of the Mandatory Pension Fund it manages to check their account balances on-line, i.e. on its website.

• Our business is controlled by the state Agency for Supervision of Fully Funded Pension Insurance – MAPAS;
• Our founders are well-known financial institutions;
• Assets of KB First Open Mandatory Pension Fund – Skopje are segregated from the assets of the Company;
• Assets of the Fund are kept by a separate institution – Custodian Bank;
• Fund’s assets are invested in accordance with strict regulations in order to maximize yield, only to the benefit of members and retired members, and to minimize any risk of losses through diversification and financial analysis;
• Share capital of KB First Pension Company AD Skopje is 1.8 million euros;
• Under the law, Fund’s assets may not be subject to claims, nor can they be enforced for bankruptcy purposes;
• State guarantee from the State Budget of the RNM in the amount of 80% of the loss incurred by the Fund as a result of fraud, theft or embezzlement.

If the Company goes bankrupt, the assets on the accounts of Mandatory Pension Fund’s members shall not be lost – they shall remain on the accounts of Fund members with the Custodian Bank, while the Agency for Supervision of Fully Funded Pension Insurance shall, within the shortest possible period, carry out a procedure to find another adequate company that will manage the Mandatory Pension Fund.

With the membership in the Voluntary Pension Fund within the Third Pension Fund, you save regardless of the pension in the Pension and Disability Insurance Fund of the Republic of North Macedonia.

• You secure yourself an additional source of funds regardless of the pension in the Pension and Disability Insurance Fund of the Republic of North Macedonia. Your pension also depends on the amount of the voluntary contribution you pay and the period of saving.
• The voluntary pension insurance provides benefits for additional savings.
• You pay as much as you can and when you want.
• The membership in the Voluntary Pension Fund does not oblige you to pay pre-defined amounts every month, i.e. you can pay when you decide and as much as you can, and your rights remain the same.

With an individual membership in the Voluntary Pension Fund, you save regardless of the pension in the Pension and Disability Insurance Fund of the Republic of North Macedonia and you get the following benefits:

• The concluded contract is without binding components – The change in the amount of the payment does not affect the right to membership, i.e. it does not mean termination of the membership.
• You get maximum flexibility – You pay as much as you want and when you want, the paid funds are invested and the yield realized on them is distributed to the individual account of each member accordingly.
• Gain – all payments are fructified and yield is achieved.
• The funds are INGERITABLE – in compliance with the Law on Inheritance, the funds are part of a heritage assets of estate which is implemented after the death of the member.

Payment of funds – the funds from the voluntary capital financial pension insurance can be withdrawn at least 10 years before the age required for acquiring the right to an old-age pension, i.e. 54 for men and 52 years for women. The member decides on the method of payment of the funds.

By organizing a pension scheme within the Voluntary Pension Fund, companies can use a number of benefits, such as:

• Inclusion of the product in the employee reward system
• The company takes care of its employees.
• Use of tax benefits regarding the Law on Personal Income Tax and the Law on Profit Tax.

Benefits regarding the Personal Income Tax for payments through the pension scheme:

According to the State Statistical Office, the Personal Income Tax is not chargeable for a paid contribution in a voluntary pension fund in the amount of up to two average monthly gross salaries in RSM per employee, published in January for the current year. For 2022, the amount that is not subject to taxation with personal income tax amounts to 87,018 MKD per employee.

Benefits regarding the Profit Tax for payments through the pension scheme:

The expenditures on the basis of paid contribution in the voluntary pension fund in one calendar year are tax-recognized expenditure regarding the Profit Tax, in the amount of up to two average monthly gross salaries, paid in the previous year in R.S.M. For 2022, this amount is 85.774 MKD per employee.

Pursuant to the Law on Personal Income Tax (Official Gazette No. 241/2018 and 275/2019), the following innovations have been introduced:

• in case when the contributions are paid by a natural person – when paying a pension benefit from an individual account, only the realized income from invested funds is taxed,
• in case when the contributions are paid by a legal entity – when paying a pension benefit from an individual account, the amount of the pension benefit reduced for the paid contributions, previously taxed in compliance with the Law on Personal Income Tax, is taxed.

You can make the payment of funds into the Voluntary Pension Fund yourself or a third person can make the payment on your behalf and for your account. Certainly, the payer must be known, i.e. sign your Agreement for Membership in KB First Open Voluntary Pension Fund as a payer.

• A personal, i.e. voluntary individual account with funds which are not used for payment of somebody else’s pension, but are subject to inheritance.
• The entire amount accumulated on your individual account will be used by you. These funds are not used for payment of somebody else’s pension, but represent your personal assets that you will use as part of your future pension. These funds are subject to inheritance in case of any member’s death, and they can be used in case of any general work incapacity established by the Commission assessing work capacity at PDIF.
• Possibility for higher pension.
• Through your membership in the Voluntary Pension Fund you provide yourself with an additional source of income after retirement. Thus, you can use your future pension from three sources, i.e. the PDIF, the Second Pillar Mandatory Pension Fund and the Third Pillar Voluntary Pension Fund.
• If you have never been employed, the Voluntary Pension Fund membership will provide you with funds to use as your own pension.
• Selectable way of using the accumulated funds.
• You can adjust the way of fund withdrawal to your needs. You can decide yourself in which of the following ways you will withdraw your funds:
  1. Programmed withdrawals
  2. One-off or multiple withdrawals
  3. Annuities
  4. Combination
• You can use/start withdrawing the funds from your individual account 10 years before retirement.
• Complete insight into the balance of your funds.
• Through the delivery of regular annual reports or statements on your request with regard to your personal account balance, you have a complete insight into the funds on your personal account. This increases the transparency of KB First Pension Company in its management of the Voluntary Fund and your money.
• For the purpose of fast, simple and updated insight into the status of your account, KB First Pension Company enables the members of the Mandatory Pension Fund it manages to check their account balances on-line, i.e. on its website.

Yes, there is a possibility to join KB First Open Voluntary Pension Fund through the company where you work.

Your company can make a contract for an occupational pension scheme which will also include you, and pay on your behalf funds for additional pension insurance to your personal – professional account.

The KB First Open Voluntary Pension Fund membership through your company’s participation in an occupational pension scheme allows you to use the same rights as for the individual membership, except the right to income tax return and voluntary contribution payment (voluntary contribution payments for any participant in an occupational pension scheme can be made solely by the employer – insurer).

Find out if your company has an occupational pension scheme.

Occupational pension scheme

Occupational pension schemes enable additional collective pension insurance organized and financed by companies or citizens’ associations. The organization and financing of occupational pension schemes primarily means caring for the future and providing a higher standard of living after retirement of companies’ employees/members. The funding of occupational pension schemes may, or need not be an additional cost to the companies, which can keep their costs at the planned level by an adequate allocation of their financial resources, while generating additional income for their employees.

The occupational pension scheme is a way to pay voluntary pension insurance contributions agreed between the employer and its employees or the citizens’ association and its members, included in the Voluntary Pension Fund.

More employers or several citizens’ associations can organize and fund occupational pension schemes together.

The employer shall adopt rules regarding the occupational pension scheme and sign an agreement organizing and financing the occupational pension scheme with the company it has selected to manage the Voluntary Pension Fund where the occupational pension scheme will be included. The employer may determine which employees or members can participate in the occupational pension scheme, the amount of payment made for each of them, the frequency of payments etc.

• Our business is controlled by the state Agency for Supervision of Fully Funded Pension Insurance – MAPAS;
• Our founders are well-known financial institutions;
• Assets of KB First Open Voluntary Pension Fund – Skopje are segregated from the assets of the Company;
• Assets of the Fund are kept by a separate institution – Custodian Bank;
• Fund’s assets are invested in accordance with strict regulations in order to maximize yield, only to the benefit of members and retired members, and to minimize any risk of losses through diversification and financial analysis;
• Share capital of KB First Pension Company AD Skopje is 1.8 million euros;
• Under the law, Fund’s assets may not be subject to claims, nor can they be enforced for bankruptcy purposes;

If the Company goes bankrupt, the assets on the accounts of Voluntary Pension Fund’s members shall not be lost – they shall remain on the accounts of Fund members with the Custodian Bank, while the Agency for Supervision of Fully Funded Pension Insurance shall, within the shortest possible period, carry out a procedure to find another adequate company that will manage the Voluntary Pension Fund.

Any Pension Fund is always managed by a certain Pension Company, similar to Investment Funds. In accordance with legislation, one Pension Company may manage the assets of one Mandatory Pension Fund, one Voluntary Pension Fund or one Mandatory and Voluntary Pension Fund.

The Fund consists of funds paid by its members upon the collection of fees, increased by the yield on their investment.

Owners of Pension Funds are their members, while the assets of Funds are completely segregated from the assets of the Company that manages them, and they are kept safely at the Custodian Bank.

Pension Companies are legal entities, i.e. joint stock companies whose core business is to manage Pension Funds’ assets operationally and strategically.

Basically, the method of operation of either Mandatory or Voluntary Fully Funded Pension Funds is the same – Pension Funds’ assets are invested in accordance with the relevant laws and regulations, while the overall yield earned from such investments is attributable to the members of the respective Fund.

It is important to highlight that employment is a prerequisite for payment of funds to personal accounts of Mandatory Pension Funds’ members, and the amount of contributions for the Second Pension Pillar paid to individual accounts of the Second Pillar Mandatory Pension Funds’ members is 6% of their gross wage.The funds paid to the Mandatory Pension Fund are not an additional cost for the member or the company where he/she works, but the word goes about the allocation of funds paid into the mandatory pension insurance system, i.e. funds paid before the reform of the pension system.

The payment of funds to personal accounts of Voluntary Pension Funds’ members means payment of members’ personal assets, third parties paying on behalf and for the account of members or companies where members work. Because of this, Voluntary Pension Fund membership is not directly linked to, or conditioned by employment.

Certainly, there are other important specifics/differences defined by laws and regulations relating to membership possibilities, securities in which assets of individual Funds can be invested, investment limits, ways of using such assets etc.

Assets on the personal accounts of members of the Fully Funded Pension Funds from the Second and Third Pillar are recorded in accounting units. An accounting unit represents the member’s proportionate share in the total net value of either the Mandatory or Voluntary Pension Fund.

Example:

• If you, as a member of the Mandatory Pension Fund managed by KB First Pension Company, have one accounting unit on your personal account
• KB First Open Mandatory Pension Fund – Skopje has a total of 1,000 accounting units
• In such case you are the owner of 0.001 part thereof, or 0.1% of the Fund (1/1,000).

All new payments into the Fund shall be converted into accounting units, such that the amount paid shall be divided by the value of the Fund’s accounting unit, at the date of payment. The accounting unit’s value changes every day.

Example:

• If your payment into KB First Open Voluntary Pension Fund is 1,000.00 denars
• The value of the accounting unit at the date of payment is 100.00 denars
• Then your payment shall be converted into 10 new accounting units.

The accounting unit’s value shall be obtained such that the total net value of the Pension Fund shall be divided by the total number of accounting units of all members of the relevant Fund. It is calculated on a daily basis and it depends on several factors: the yield from individual investments, the price movement of securities in which assets of the Mandatory Pension Fund are invested, exchange rates, etc.An accounting unit of 105.00 shows that the yield of the Fund until such period was 5%, compared to the initial value of the accounting unit of 100.00.

The value of your assets represents the number of accounting units you own multiplied by the value of the accounting unit at the date of valuation.

Your future pension from the Pension Fund of the Second or Third Pillar largely depends on the accounting unit’s value.

For example, if the value of the Pension Fund’s accounting unit at the beginning of your membership was 100.00 units, and it was continuously growing in the years of your membership in the Fund, where the value of the accounting unit at the date of your retirement was 140.00 units, you would have as much money on your account as you had accounting units at the date of retirement multiplied by 140.00 as the value of the accounting unit at the date of your retirement.

Example:

• Assumed number of accounting units at the date of retirement = 9,500
• Accounting unit’s value at the date of retirement = 140.00
• Total assets on your personal account you can use = 9,500 x 140.00 = 1,330,000.00 denars

Hence, the higher the value of the accounting unit, the more money you have in your account.