Private pensions, slow growth even in the third quarter

2025-11-18 19:48:00, Ekonomi CNA

The voluntary private pension market continued to expand in the third quarter of this year, but at relatively slower rates.

According to data from the Financial Supervisory Authority (AMF), at the end of September the number of fund members reached 48,864 members, up 1.3% compared to the previous quarter. Since the beginning of the year, the number of members in private pension funds has increased by 8.8%.

The number of individuals participating in private pension funds has been growing at a steady pace in the last decade and is at historically high levels.

However, the penetration of private pensions still remains at modest levels and the number of individuals contributing to a private pension constitutes approximately 6.4% of the number of contributors to the public social security scheme.

The value of pension funds' net assets at the end of September this year reached 9.3 billion lek, an increase of 4.5% compared to a quarter earlier and 9.5% since the beginning of 2025.

However, if we include closed-end pension funds, the total value of assets is significantly higher, by approximately 14.4 billion lek or 11.6% more since the beginning of this year.

Pension fund assets are mainly invested in Albanian government bonds. In terms of asset value, the private equity market still remains the smallest segment of the financial market in Albania.

Currently, seven private pension funds are active in the private pension market, managed by four management companies.

According to the number of members, the largest player in the market is Credins Pension, with about 40.04% of the total number of members, followed by Sigal Max with 36.92%, Raiffeisen Pension with 10.61%, Albsig Pension with 9.67%, Smart Pension, with 1.45% and Sigal Pro Pension, with 1.31% and Master Pension with 0.01%.

By net asset value, the largest fund is Sigal Max with 37.99% of the total, followed by Credins Pension, with 30.01%, Raiffeisen Pension, with 20.54%, Albsig Pension with 9.74%, Smart Pension, with 1.26% and Sigal Pro, with 0.65%.

The new Law "On Private Pension Funds", which entered into force at the end of 2023, has brought increased fiscal incentives for contributions to private pension funds.

The maximum monthly tax exemption limit for private pension contributions has been increased to the level of the approved minimum wage, which has reached 40 thousand lek per month. From 2026, the exemption limit will increase to 50 thousand lek per month, following the increase in the minimum wage. With the current minimum wage level, the amount of contributions exempted from taxes reaches 480 thousand lek per year. Private pension contributions paid by the employer in favor of the employee will also be exempt from tax to the same extent.

The law also provides that pensions are not taxed on the contribution portion, but only on the return on investment, provided that the withdrawal is made in monthly payments spread over at least two years and not immediately, after meeting the legal conditions for benefiting from a private pension.

Despite increased incentives, the expansion of the third pillar of private pensions continues to be slow.

This year, in its opinions on the draft budget in the Albanian Parliament, the Bank of Albania recommended the establishment of a second pillar of mandatory private pensions, as well as the further promotion of the third pillar. In the long term, it is estimated that private pension pillars can ease the burden of the public pension scheme on the state budget./ Monitor