Legal Basis for Pensions Fund

Legal Basis

Law no.10197 dated 10.12.2009 “On voluntary pension funds” adopted by the Assembly of the Republic of Albania and supporting regulations, issued by the Financial Supervisory Authority are the basis of the activities and operations of the voluntary Pension Fund. The law and regulations requirements form an integral part of the prospectus of the Credins Pension Fund

The Financial Supervisory Authority to address road “Dora d’Istria”, No.10 P.O. Box 8363, Tirana, Albania, exercise supervision over the activities of the managing company, the Fund and the Depositary.

Law no.10197, dated 10/12/2009 “On voluntary pension funds”
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Depository

  • Depository Bank is responsible for safekeeping the fund’s assets.
  • Depository Bank is licensed by the Bank of Albania and the Financial Supervisory Authority for the custody and depositary activity of Pension Funds.
  • Depository Bank is regulated and supervised by the AFSA.
  • The depository bank aims to protect the interests of fund members.
  • The depository bank is obliged to report to the AFSA any breaches of the Management Company.
  • It performs the function of control of compliance and independent reporting for the Fund.
  • The Fund carries no risk of the Depository bank, and nor of the Management Company, according to Albanian law and international principles of establishing and administering the funds.
  • The Fund’s assets may not be subject to claims or executions, carried out on behalf of the Management Company or the Depositary creditors.
  • The Fund is not part of the bankruptcy proceedings.
  • Tirana Bank sh.a., it is the depositary bank for the Pension Fund.

Tax Treatment of Pension Fund

The fund is a pool of assets established on contract basis without legal personality and therefore not subject to income tax, or tax on added value. Taxation of the Fund is based on Law no. 8438, dated 28.12.1998 “On Income Tax” as amended, and regulations and other acts driven by the law as well.

Fiscal treatment of contributions made by members:
  • In accordance with law no. 10 197, dated 10.12.2009 “ On Voluntary Pension Funds “, Article 88:
  • The contribution made by each member in the Fund shall be deducted from the personal income tax purposes.
  • Return on investment including capital gains, from investments made by the fund’s assets are not subject to taxation on the pension fund or the management company.
  • Contributions made by an employer on behalf of contributors and user accounts of the Fund for tax purposes, is not considered personal income member.
  • If a member of the Fund is under 50, the limit on the tax treatment of the annual contributions is lower value arising from comparing the amount of 200 000 ALL and 15% of annual gross revenues of the member.
  • If the member is over 50 years, the limit on the tax treatment of the annual contributions is lower value arising from comparing the amount of 250 000 ALL and 25% of annual gross revenues of the member.
  • The purchase of the Fund’s shares is a financial service and therefore is exempt from VAT.
  • Services provided by the Depositary to the Management Company and the members is valued as a financial service and therefore are exempt from VAT.
  • Tax following early withdrawal is the applicable rate in the moment of withdrawal.
Tax treatment of contributions made by the employer

Contributions made by an employer on behalf of its employees in an occupational pension plan are estimated as operating costs, up to an annual amount for each employee, equal to 250 000 ALL, and that amount is considered a deductible expense for corporate income tax purposes.

Tax treatment of the benefits received by the member

Any payment received by the Fund member at the time when he becomes eligible to receive pension benefits, is taxed with the personal income tax.


Early withdrawal:

If the Fund member wants to withdraw accumulated assets in his personal account before meeting the legal conditions laid out in the law, it is considered early withdrawal.

The penalty of early withdrawal: In case of early withdrawal, management company will apply penalties which shall be calculated on the member’s net asset value after tax is deducted. Early withdrawal shall incur penalties that are calculated proportionate to a member’s time from first contribution to withdrawal and more specifically:

  • not less than 2% and not more than 5% of assets withdrawn for any early withdrawal after 20 years from the date of the first contribution;
  • not less than 5% and not more than 10% of the withdrawn assets for any early withdrawal carried out in the period that begins after 10 years from the date of the first contribution to 20 years of the first contribution including year 20th;
  • not less than 10% and not more than 15% of withdrawn assets for any early withdrawal in the period that begins after 5 years to 10 years from the first input data including the 10th year;
  • not less than 15% and not more than 20% of assets withdrawn for any early withdrawal in the period up to 5 years from the date of first contribution, including the 5th -year.

Percentage of specific penalty for each case as defined in 1, 2, 3, 4 points will be calculated proportionally depending on the period of contributions.

For purposes of calculating the early withdrawal penalty, the date of the first contribution will be considered the first date of contribution in the first pension fund.


Inheritance Fund:

If the member dies before receiving payment of all its assets, assets in his account will be distributed to its successors in accordance with the legal provisions governing the inheritance.

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