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2023 m. sausio 28 d., šeštadienis

Kuodis on pension accumulation: 20 years was enough time to figure it out

"After second-tier pension funds went through a recession last year, and tens of thousands of residents this year received notices about being included in this method of accumulation, economist Raimondas Kuodis calls for a broader view of investment and preparation for old age, reports LNK Žinios.

 

"The advice would be this: there is not only the second tier, the third tier, there are many tiers where you can accumulate if you look more closely. You are a hoarder to yourself.

 

You can "store" your brain, read books, learn to make things that will be needed in old age. Which many people intuitively do. Frees himself from credit, buys some solar power plants so that he doesn't have to worry about electricity prices. This is also taking care of old age,'' says R. Kuodis, who is also the deputy chairman of the board of the Bank of Lithuania.

 

He observes that there are attempts in the public sphere to narrow the concept of investment.

 

"They always want to somehow push us that investing is only at the second stage and that it is only the accumulation of financial resources. No. Investing is a much broader subject. Invest in relationships - then family, friends will help you, you will help each other when needed. I just want to turn that discourse back a bit on a more normal track. Because those lobbyists have already taken over the airwaves so much that you hardly hear anything else,'' says the interviewer.

 

According to him, it is almost two decades later that the true benefits and value of the accumulation initiatives can be assessed.

 

"I wouldn't call it a tragedy that funds lose in one year and earn in another, because such things happen. But you have to look at the long term. 20 years is a long enough period for us to finally hear how the world banks and the European Commission have been stabbing us here, scaring us with a decrease in the number of people of working age, even though they took and recorded the working age at 64 years old,'' said the expert.

 

According to him, risk cannot be completely avoided in life, but it must be separated from unmeasured risk, saying that "cryptocurrency is a complete casino, it has nothing under it."

 

"Lotteries are common in our lives - we don't know how long we will live, whether we will get that pension or not. We don't know if politicians will close some "Sodros" out of stupidity, we don't know what the financial returns will be in pension funds, due to all kinds of wars, natural cataclysms. There is no need to be afraid of this, risk management methods are there to control these things,'' he says.

 

According to R. Kuodis, it is necessary to assess whether any proposed stage changes the previous one.

 

"In the beginning, it was invented this way: you save less in Sodra, you save more in the pension fund, and in the long run we have to compare the return of one euro left in Sodra with one euro that went to the second or third tier.

 

Of course, we wouldn't see miracles, which is what we said right away, because "Sodra" also has a return, although the lobbyists scared us that "Sodra" would fail, the Lithuanian Free Market Institute suggested closing "Sodra" a dozen years ago, - said R. Kuodis.

 

He believes that active promotion of private accumulation was socially irresponsible.

 

"All pension fund lobbyists were gold and silver supporters of politicians. This is how they tried to make a business, "killing" the public system. Which seems completely irresponsible to me, but it seems perfectly fine to them, because they want those Porsches (Porsche cars), yachts quickly, they don't care about your aging, demographics,'' says the economist.

 

"Now it is clear - after almost 20 years have passed since that reform - it is beginning to be seen that pension funds are barely outpacing inflation." They chose this goal themselves. "In Sodra, the return is increasing faster because wages grew significantly during this period," the interviewer says.

 

According to him, the return of private pension funds includes the contribution of the residents themselves.

"The most amazing thing that they (funds - ed.) were able to do was get subsidies for themselves, compared to Sodra, which does not receive subsidies from the government. Of course, the government does not have any subsidies, it is dead - let's repeat it a thousand times. We pay subsidies to ourselves from our taxes, and they present it to you as their merit', R. Kuodis says.

 

He compared this situation to occupational pensions in Western countries.

 

"They take a piece of your salary without your knowledge and the employer says, look, I'll pay you a pension, we'll invest somewhere in our name, you'll get a pension. Everyone freaks out who doesn't understand and is eternally grateful to their employer. Look at those fairy tales a little more critically", says the economist.

 

Lithuanian Tier II pension funds experienced a recession last year - their value shrank by almost 14 percent. However, the representatives of the fund managers explain that in the long term the growth of the value of the funds remains positive.

 

"Sodra" announced in January that it had sent notifications to 67.7 thousand people, residents who are included in the accumulation of second-tier pensions this year. It can be waived for newly added participants. 1.4 million of the people in the country accumulate money in these pension funds.”


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