10 Mar The “Credins Pension” Fund continues to grow despite the pandemic!
Rovena Balla, Business Development Director at Credins Invest, in an interview at Scan TV, talks about the voluntary pension market throughout 2020. Despite the situation caused by the pandemic, the number of members and the net asset value has increased. Members in pension funds have chosen to stay invested and have not fluctuated from the situation, because they have realized that pension funds are long-term investments intended for retirement age. 2020 has been a good year for the voluntary pension market. The Credins Pension Fund consists of individuals who belong to state, private and individual institutional schemes. What we aim to promote and protect is our mission: “Maintaining the same living standard even at retirement age.” You can watch the full interview on our Youtube channel, or you can read it below:
How was 2020 for the private pension sector, while the figures speak of a significant increase, although slower than in previous years?
It is difficult with the current situation, not to worry about the future of our finances. These are exactly the difficult days we are going through, when security and the prospect of a better financial future seek to be at the top of our minds. During 2020, the number of members in pension schemes is about 31 thousand individuals out of 28 thousand during 2019. The voluntary pension market, in the last year, has resulted in an increase of 9.72% in the number of members, and 23.8% in asset value, despite the pandemic. Members of pension funds have chosen to stay invested and have not fluctuated from the situation created as a result of the pandemic, as they have realized that pension funds are long-term investments intended for retirement age. Referring to the figures, we can say that 2020 has been a good year for the voluntary pension market in terms of increasing the number of members, but also in increasing the value of assets.
The figures show an increase of Credins Pension in assets value, and a small decrease in market dominance, from 60% to 56%. Is the company focused more on quality than quantity, in terms of private pensions?
We proudly say that for years, Credins Pension continues to rank first in number of members owning 56% of the market. The number of operators for voluntary pensions, from 3 operators in 2019, has increased to 4 during 2020. Our main goal during 2020, has been to keep active clients in the pension fund by orienting them to increase the amount of contributions, based on an analysis of their income, to benefit more today from the fiscal facilities provided by law for funds, as well as to provide more income at retirement age. So, what we aim to promote and protect is our mission “Maintaining the same living standard even at retirement age.” Through the ongoing market education and financial advice we provide, the figures show that we are on the right track.
Can you tell us something more about the demographic or geographical profile of the members of the voluntary pension fund? (So which age groups or counties are most interested, what does the trend look like?)
Credins Pension members are mainly concentrated in urban areas, where it is worth mentioning the main cities of Tirana, Durrës, Vlora, Shkodra, Fier, Korça, where the economy is moving faster and the opportunity to invest is greater. Creating a long-term investment plan is often viewed with skepticism by young people whose retirement age seems too far away. They have just entered the job market, and are looking for a continuing education in order to be convinced of the benefits that this way of investing has, if you start it at a young age. The average age group of Credins Pension fund members is 35-45 years old, members who have established financial stability and basically understand the product and its benefits.
Do you have more individual or collective contracts?
The number of members of the Credins Pension fund consists of individuals who belong to state institutional schemes, private institutional schemes and individual schemes. We are proud to continue to be their choice over the years, having more than 19,000 members today. The client portfolio is mainly focused on individual clients, but from year to year, we have an increase in memberships from professional schemes. We manage institutions with a significant number of employees (> 500), who are involved in the professional scheme of the voluntary Credins Pension fund, by joining their staff and contributing for them.
Why should people invest in these funds? What advantages do they offer compared to other investment instruments?
Voluntary pension is a supplementary pension that is added to the state pension, without replacing it. Unlike the state pension, the voluntary pension fund is directly related to the contributions that the member makes to the pension fund. So, in the state pension we pay for today’s pensioners, in the voluntary pension funds we pay for our account, and at the retirement age, or 5 years before it, we have the opportunity to benefit the amount of contributions paid for ourselves, and the added value from the investment. Credins Pension started its activity on 01.01.2012, and it is worth mentioning that, the rate of return on investment since its establishment has resulted 51.66%. The earlier you start joining the pension fund, the higher your benefits will be during retirement age. The concept of “time” is a very important element of the pension fund. The benefit is reciprocal both in the case of individual contributions, when members pay for themselves, and in cases of professional contributions, when the employer pays for the staff.
Advantages of the individual from membership in the fund:
- Contributions are deductible from gross wages for tax calculation purposes up to a certain limit;
- Investments in the fund are exempt from interest tax – an advantage over investing in other financial products;
- Possibility of periodic payments in the form of pension, gaining more interest;
- Deposit of small amounts below the required minimum deposit;
- Automation of payments: the monthly payment for voluntary contributions to the professional scheme is made automatically by the employer according to the membership contract.
Advantages of the employer from membership in the fund:
- Employee benefit scheme as part of human resources policy;
- Payment of lower profit tax: contributions are deductible expenses of the company for the purpose of calculating the profit tax;
- Incentive for qualified applicants and reduction of “turnover” of employees outside the company;
- The employer specifies in the contract “vesting period”, the time for which the employee must work in the company to benefit this investment of the employee, which is not more than 2 years.
To all those who have thought about retirement, but have not yet joined a voluntary pension fund, Credins Invest team can present you opportunities to project your future.