CMS Expert Guide to Pensions in Slovakia

Slovakia has a three-pillar system. The first pillar is a compulsory pension insurance which includes all individuals. The second pillar is an old-age savings plan for those wanting to take out optional pension insurance. The third pillar is an optional complementary pension saving plan.

The first pillar is the compulsory public pension scheme, funded through social insurance contributions collected by the Social Insurance Agency. It operates on a pay-as-you-go basis and provides a defined benefit pension based on the individual’s income and years of contributions.

The second pillar consists of old-age pension savings managed by private pension fund management companies (DSS). A portion of the contributions from the first pillar is redirected into personal accounts and invested in pension funds, with the future pension depending on the performance of these investments. 

The third pillar includes voluntary supplementary pension savings, managed by supplementary pension companies. These personal pension plans are funded by individuals and/or employers and are supported by tax incentives. Participation in the third pillar is compulsory for employees working in jobs classified as hazardous or high-risk, such as certain roles in mining, heavy industry, or emergency services.

Slovakia’s pension system consists of three pillars, with both mandatory and conditional participation. The first pillar, the state pension scheme, is mandatory for all economically active individuals. 

As of 1 May 2023, individuals under the age of 40 who become insured for pension purposes for the first time are automatically enrolled in the second pillar, which involves old-age pension savings managed by private pension fund management companies (DSS). These individuals have 180 days from the start of their participation to select a DSS and conclude their first pension savings contract. 

The third pillar, comprising supplementary pension savings, remains voluntary for most individuals but is compulsory for employees working in jobs classified as hazardous or high-risk.

In the first pillar, individuals do not establish their own pension plan. It is an automatic component of the mandatory pension insurance system, managed by the Social Insurance Agency. There is no option to set up a plan individually, as participation is required by law. 

In the second pillar, an individual may enter into a pension savings contract with a chosen pension fund management company (DSS), provided they meet the legal conditions—typically being under 40 years of age at the time of entry. Only DSS companies licensed by the National Bank of Slovakia are authorised to manage these savings, so restrictions apply regarding who may operate such plans. 

In the third pillar, a pension plan can be established either by an employer for their employees or individually by a natural person. However, these plans may only be operated by supplementary pension companies licensed by the National Bank of Slovakia. As such, restrictions exist primarily on who is permitted to manage and provide these pension products.

In the first pillar, pension insurance is managed exclusively by the Social Insurance Agency, a state institution. No other entities are permitted to operate or administer this part of the system. 

In the second pillar, pension funds may only be managed by pension fund management companies (DSS) that hold a licence issued by the National Bank of Slovakia. These companies are responsible for investing and administering participants’ savings. 

In the third pillar, supplementary pension savings can only be managed by supplementary pension companies, which must also be licensed by the National Bank of Slovakia. These companies offer pension plans to individuals as well as through employer-sponsored schemes. 

As such, the operation and management of pension plans in Slovakia are restricted to specific licensed institutions under the supervision of the national regulator.

In the first pillar, contributions are mandatory and set by law. As of 2024, employees contribute 4% of their gross salary, and employers contribute 14% for old-age pension insurance, making a total of 18% of the employee’s salary directed to the first pillar. 

In the second pillar, a portion of the contributions from the first pillar is redirected. Currently, 4% of gross salary is allocated to the second pillar. This rate was intended to increase annually, but it is currently frozen due to fiscal consolidation measures. 

In the third pillar, the amount of a participant’s monthly contributions to the supplementary pension savings scheme is agreed in the participant contract. The level of contributions paid by an employer on behalf of their employees – who are the participants – is specified in the employer contract concluded between the employer and the supplementary pension company. The payment and amount of employer contributions may be agreed in a collective agreement or negotiated directly between the employer and the authorised representatives of the employees. 

An employer who employs participants performing high-risk work is required to conclude an employer contract and must pay contributions for these employees into the supplementary pension savings scheme. The employer’s contribution must be at least 2% of the employee’s assessment base or income accounted for contribution purposes. A participant performing hazardous work may, but is not obliged to, pay their own contributions during the period in which they carry out such work.

Not as such, but companies managing second and third pillar funds are entitled to charge for carrying out certain activities, and these charges will need to be met from the funds.

7. What age are benefits taken?

In Slovakia, the age at which pension benefits can be taken depends on the specific pension system pillar. 

In the first pillar, the statutory retirement age is currently 64, but it is gradually increasing in line with life expectancy. Certain exceptions apply, such as earlier retirement for individuals who have raised children or for those working in specific professions. 

In the second pillar, benefits are typically accessed at the same time as in the first pillar, upon reaching the statutory retirement age. The accumulated pension savings are then converted into retirement income, either through an annuity or programmed withdrawals.

In the third pillar, participants can generally start receiving benefits from the age of 55, provided they have been saving in the scheme for at least ten years. For employees working in hazardous or high-risk jobs, where participation is compulsory, the retirement age may align with the early retirement age defined under the first pillar. 

If a participant in the second or third pillar dies before entering retirement, the accumulated amount is paid out by the pension fund management company to the designated beneficiary. If no beneficiary has been designated, the pension savings become part of the inheritance proceedings. This also applies where the saver has already reached retirement age but has not yet started receiving a pension from the second pillar. In the case of the first pillar, the accumulated contributions remain with the Social Insurance Agency.

The costs of second-pillar arrangements are covered by the pension fund management company and from the funds collected through mandatory contributions. All costs related to the third pillar are paid from the assets in the supplementary pension fund, which is made up of contributions, investment returns, and assets transferred from other supplementary pension funds.

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12. Are benefits taxed?

Benefits under the third pillar are subject to a withholding tax of 19% on the payment of benefits to a member. Benefits under the first and the second pillar are exempt from tax.

Contributions to a complementary savings plan (third pillar) are a non-taxable portion of income. Contributions in each tax period are exempt up to a maximum of EUR 180. To benefit from this tax relief, certain conditions must be complied with.

The level of first and second pillar contributions is set out above. There is no limit on third pillar contributions.

Licences for establishing and operating a pension assessment management company and complementary pension insurance company are issued by the National Bank of Slovakia (the ‘NBS’). The NBS also supervises the operations of pension assessment management companies and complementary pension insurance companies and is authorised to impose sanctions for defaulting on any obligations.

Pension fund management companies and complementary pension insurance companies are required to provide the National Bank of Slovakia (NBS) with certain prescribed information, including any changes to their financial position and other matters that may affect their ability to meet their obligations. The NBS may also request additional information as necessary to carry out its supervisory functions.

Supervision over the second pillar is done by the NBS. Supervision of the third pillar is done by the NBS and the National Labour Inspectorate. There is a detailed system of financial control operated by the NBS. The assets in the funds of pension assessment management companies and complementary pension insurance companies are allocated to depositary banks, and if the company becomes insolvent, savers are transferred to another company.

Any direct or indirect discrimination based on gender, marital or family status, race, colour, language, age, health condition, faith and religion, political or other views, ethnicity, property or lineage is prohibited.

Only those whose participation in the second pillar began automatically after 1 May 2023, may opt out of the system. This applies regardless of whether they selected a pension fund management company (DSS) themselves (by signing a pension savings contract) or were assigned one by the Social Insurance Agency. A saver whose first pension insurance relationship began before May 1, 2023, and who voluntarily joined the second pillar does not have the option to leave it. A saver who was automatically enrolled in the second pillar may opt out within 730 days from the start of their participation, that is, from the date their first pension insurance commenced after 1 May 2023. It is possible to cancel participation in the third pillar; however, the process depends directly on the conditions set by the supplementary pension company you have chosen. Additionally, the cancellation process also varies depending on the type of fund into which your savings have been invested.

Collective agreements can play an important role in the third pillar of the Slovak pension system, particularly through the involvement of trade unions.

It is present to a limited extent and mainly applies to the third pillar of supplementary pension savings. In this pillar, employee representatives such as trade unions may take part in the selection of the supplementary pension company (DDS) when an employer establishes a pension plan for its employees. They are frequently involved in negotiating the terms of employer contributions through collective agreements. These agreements may define contribution levels, eligibility conditions, and additional benefits linked to employment duration or specific job categories. In certain cases, employee representatives may also act as authorised parties when concluding or amending contracts between the employer and the DDS.

In the second pillar, which consists of old age pension savings, there is no formal codetermination mechanism. Pension fund management companies (DSS) are private entities licensed and supervised by the National Bank of Slovakia, and participants do not have a direct role in their governance or decision-making processes.

Codetermination is also absent in the context of supervisory and regulatory oversight. In both the first pillar and the overall regulation of pension schemes, decisions are made at the institutional and government level primarily by the Social Insurance Agency and the National Bank of Slovakia without formal representation or participation of employees or their representatives.

Activities of pension assessment management companies can be provided only by joint-stock companies based in the Slovak Republic. A complementary pension insurance company may be authorised to carry out activities in the territory of a hosting member state after prior notification to the NBS. A foreign occupational pension company can offer occupational pension security in the Slovak Republic if it has notified the competent authority of its home member state (if it is an EU member state or Iceland, Lichtenstein or Norway) and that competent authority delivered the notification to the NBS.

In both the second and third pillars, members may change the administrator managing their contributions, the pension assessment management company or the complementary pension insurance company.