3rd pillar pension funds

Why is it worth saving money in 3rd pillar pension funds?

3rd pillar pension funds involve supplementary voluntary accumulation based on long-term periodic investing. By accumulating contributions each month, investment risk is dispersed and the portfolio is protected from loss of value, making it possible to obtain the best risk/return ratio.

Lithuania offers favourable terms for voluntarily accumulating in 3rd pillar pension funds. The state promotes pension savings by making a yearly personal income tax exemption available.

When accumulating a supplementary pension for at least 5 years and making withdrawals no earlier than 5 years before retirement age while taking advantage of the tax exemption, pay-outs from the supplementary voluntary pension fund account will not be taxed. That is, the exempted taxes do not have to be repaid. In this way the state provides an incentive to all those accumulating a supplementary pension up to the retirement age. The benefit prior to 2019 is 15 per cent of contributions, which is the amount of paid taxes that is refunded when declaring personal income each year. As of 2019, the personal income tax rate will be 20 per cent, but the total amount of contributions to which the personal income tax exemption can be applied will change from 2,000 euros to 1,500 euros.

How are contributions made to a 3rd pillar pension fund account?

Once the pension accumulation agreement is signed, a pension accumulation account is opened for the participant in his or her chosen 3rd pillar pension fund. Contributions to such funds are made personally by the participant. You can pay them in by e-account or transfer at the intervals you choose: monthly, quarterly, semi-annually or more flexibly.

Other persons can also make payments to the pension fund for you: employers, family members and others. A participant can simultaneously accumulate in several different 3rd pillar pension funds.

Learn more about how employers can make contributions to pension funds on behalf of their employees here.

If you already have a 3rd pillar pension accumulation agreement, you can transfer contributions to your account using these requisites.

When can I expect pay-outs from the pension funds?

The purpose of 3rd pillar pension accumulation is to save money until retirement. The management company can set a minimum required period of participation in a pension fund. In order to take advantage of the personal income tax exemption and not pay personal income tax on amounts that are paid out, you must accumulate for at least 5 years and withdraw money from the pension funds no earlier than 5 years before the age established for receiving a state social insurance pension. Read more about pay-outs from 3rd pillar pension funds here.

What deductions are made from pension fund assets?

The law does not limit the size of possible deductions from 3rd pillar pension fund assets. Entry, asset management and partial withdrawal fees apply for 3rd pillar pension funds. Pension fund assets are also used to cover the costs of the depository, transactions processing, currency exchange and other items. You can review the relevant fees here.

What risks do participants in 3rd pillar pension funds face?

The investment risk is borne by the pension fund participant – the pension accumulation company does not guarantee the profitability of investments. That means you may recover less than you invested. You can get more information about the risks associated with pension fund investing here.

Get part of your personal income tax refunded

Under the 3rd pillar pension accumulation system, the state encourages pension savings by making a personal income tax benefit available each year and, when declaring income, get a refund of some of the amount that has been contributed to 3rd pillar pension funds.

The benefit applies to yearly payments into 3rd pillar pension funds on behalf of oneself, one’s spouse or one’s children (those under 18 and older children who are disabled), along with other expenses that reduce taxable income, the total of which does not exceed 25 per cent of one’s taxable income for the year.

For contributions made on or after 1 January 2017 to which the personal income tax benefit applies, an additional requirement now in effect stipulates that the total amount of eligible expenses reducing taxable income under the benefit may not exceed 2,000 euros per year. Thus, as of this date, the maximum size of the personal income tax benefit for one individual per year, applicable when total contributions to 3rd pillar pension funds and other expenses which reduce taxable income are 2,000 euros or more, is 300 euros. As of 2019, the personal income tax rate will be 20 per cent, but the total amount to which the exemption can be applies will change from 2,000 euros to 1,500 euros, so the total potential amount of the tax benefit will not change.

Tax refunds for pension contributions paid in during a prior year are made by 31 July of the following year when, after the end of the calendar year and before the 1 May deadline, an income declaration is submitted to the Lithuanian State Tax Inspectorate.

The size and applicability of the personal income tax benefit depend on a client’s individual circumstances and in future may change.

You can learn more about the personal income tax benefit here.

If you don’t yet have a 3rd pillar pension accumulation agreement

We invite you to sign an agreement with INVL Asset Management.

In line with your financial situation, we’ll prepare a personalised pension accumulation plan and help calculate the recommended contribution size.

The pension funds managed by INVL Asset Management vary in their investment approach and risk-return ratio. We manage pension funds according to the life-cycle concept, which means saving is most effective when you change pension funds every so often and reduce the investment risk. We recommend choosing pension funds that correspond to your age. Later we’ll make sure that at the right time you change to less risky ones.

What is your age?
Age 16–46 Age 47–57 Age 58 or older

Are you 16 to 46 years old?
We recommend choosing pension funds which allocate up to 100 per cent of investments to equity. Share prices sometimes fluctuate and that can cause losses over the short term. Such changes reflect these funds’ greater short-term volatility, but in the long term the investments are usually profitable.

Are you 47 to 57 years old?
We recommend choosing pension funds which allocate up to 50 per cent of investments to equity markets and the rest to bonds and time deposits. The value of these funds changes less over the short term, with fluctuations that reflect lower volatility, but they also earn smaller returns than equity funds.

Are you 58 or older?
We recommend choosing pension funds which invest 100 per cent of their resources in securities with the lowest risk – bonds and time deposits.

When selecting a pension fund, we recommend making a responsible and careful analysis, closely reading the rules for the pension fund and noting the risks associated with investing.


In managing pension funds ever since the first ones were established in Lithuania in 2004, we’ve built up experience that allows us to offer clients not just a professional approach, but also investment solutions that provide added value.

We’re convinced that what’s made the expansion of our pension fund activity so successful is above all the attention we give to the needs of each client, along with these strengths:

  • Age-based asset management: We seek to offer the most suitable pension fund by adhering to the life-cycle pension fund concept, dividing up investment risk across the different stages of life 
  • Constant analysis: In an effort to ensure the best risk-return ratio, we constantly analyse changing market conditions and the potential of the most attractive investments.
  • Attention the clients: Four times a year our clients get e-mailed statements regarding the assets accumulated in their pension accounts, and they can review that information on the INVL self-service portal any time at their convenience.
  • Exceptional long-term results: For the most recent 5 year period, INVL’s pension funds were the best performers in most pension fund categories in terms of the average annual return they earned, excluding life-cycle funds (as per the pension fund results reported by the Bank of Lithuania for the end of 2018).

More information

If you have questions or want to know more about pension funds, call us at +370 700 55959 or write to us at pensijos@invl.com.

  • For more information about INVL Asset Management‘s pension fund investing strategies, review our pension fund rules.
  • He’ll you’ll find fund reports and reviews.

Useful facts and links to more information related to pension accumulation activities:

While participating in a 3rd pillar pension fund, you will be required to pay the fees specified in the rules for the selected fund. The money accumulated in a pension fund is invested according to the investment strategy specified in the rules for that pension fund. When saving in pension funds, you assume the investment and investment-related risk. The value of a pension fund unit can both rise and fall, and you may recover less than you invested. A pension fund’s past results do not guarantee the same kind of results and return in the future. The results of a previous period are not a reliable indicator of future results. When seven or fewer years remain before retirement, we recommend considering investing in a conservative investment pension fund (INVL STABILO III 58+ / INVL Stable).

Before making a decision to invest, you should individually or with the help of investment consultants assess all the risks associated with investing and examine the pension fund rules, which are an integral part of the supplementary voluntary pension accumulation agreement.

A fund participant may choose from among the following forms of pension disbursements: a lump-sum pay-out, periodic partial payments (conversion at regular intervals of a portion of fund units in the pension account into cash to be paid out), or purchase of an annuity from a life insurance company.

All the information presented is of a promotional nature and cannot be construed as a recommendation, offer or invitation to accumulate money in pension funds managed by INVL Asset Management. The information provided here cannot be the basis for any subsequently concluded agreement. Although this information of a promotional nature is based on sources which are considered to be reliable, INVL Asset Management is not responsible for inaccuracies or changes in the information, or for losses that may come about when investments are based on this information.