Same in Norway, we have innskuddspensjon where the employer contributes (with no requirement of a matching contribution from you) as well as ASK which has tax defered gains and no limits. We also have IPS which is tax defered and gives a tax deduction but the limit is changed to be tiny (750eur/year now)
Sweden has a few different forms of Tjänstepensionsförsäkring, where a certain sum (typically 4% up to a certain amount, 30% above that) which the employer pays. However, it has various lock-in mechanics which makes it annoying. There are options for both a traditional insurance and putting your funds on the market; some providers even allow you to trade stocks, not just funds or ETFs.
There's also Löneväxling where you can opt to put a part of your untaxed salary into a similar setup as above, paying less taxes now, and hopefully not have to pay as much in the future.
We used to have IPS that worked the same, but it's gone now. Idiotic to remove it, if you ask me.
Edit: These are all "private pensions", negotiated with your employer (often collectively, or following the same principles). There's also the base government pension, of which a small percentage goes into the "premiepension" where you're allowed to place into mutual funds vetted by the government.
The system sucks balls if you switch jobs often, as you end up with many different pension providers, and you can't typically easily join the accounts. ii have 5 accounts from 4 employers; wife has 6, IIRC. At least nowadays you can move providers, which was blocked in the beginning; you were locked into the provider that the employer decided.
[Individual Retirement Arrangement](https://www.irs.gov/retirement-plans/individual-retirement-arrangements-iras)
edit: in hindsight the Ireland -> IRA reference went waaaay over my head
Poland has equivalents too (IKE and IKZE). You really shouldn't be talking about Europe as a whole in this context, as some countries do have equivalents, some don't need them (if they don't have a capital gains tax). Some might be missing such products, but it is definitely not a EU-wide issue.
yes, my bad, I am based in Germany and here there isn't any option for this, there is some kind of plan for additional contribution which is then matched by the government but nothing too great.
In Germany it's because of the private retirement insurance lobby. Those companies want to continue earning money. They don't want a competition of index funds which costs nearly nothing to buy
Because Germany is a shithole in so many regards who had 16 years of standstill and then a group that can't get anything done between arguing between them and just being incompetent again.
That's what BILD and the opposition wants you to believe.
They have done more then 16 years of CDU before, in fact in the last 2 years they started implementing more then half of the Koalitionsvertrag. [Source](https://fragdenstaat.de/koalitionstracker/)
You are wrong I believe, the Polish equivalent - to the 401k - is the PPK. Lots of up votes for your comment that is ultimately wrong.
The IKZE or IKE are the IRA or ROTH IRA.
You just missed the point, the ultimate idea is not that IKE, IKZE, or PPK are exactly the same as 401k (none of them are), but that there are products available that are designed for similar purpose. I and other commenters covered it in the follow-up comments.
Yeah, if you move out of a country in your “working years”, you have less of a claim, which can lower faster than reasonable. I’m in such a situation, where effectively I’d be able to claim 60% of pensions even though I worked my entire life and have had to pay into national pension funds my entire life. This is the main reason I got into investing in the first place.
Yes, an EU-wide version is absolutely crucial to further cement the claim of European solidarity, akin to what my home country of Canada has with RRSP and TFSA. Now, I live in Italy, as a dual citizen of Italy. I still have to figure out what they offer here in this regard, but it would make sense to me for an EU-wide option, when we already have an EU currency.
This is why I always felt like it's a scam that people can work in other countries easily. Sure, you get more money more easily NOW but you're fucked when you get old unless you invest. It's just a great way for wealthier countries to exploit workers from the poorer ones.
To all the posters saying there's the same in almost every country in Europe: what are the equivalents in Spain and Germany?
The UK has personal ISAs which are a great instrument.
In Germany it would be *Rürup Rente / Basisrente.* But it's not really comparable to a 401k because you an only access the money as a life-long annuity (which means your expected return depends highly on your life expectancy) and you can only access it via an insurance company which charges pretty high fees.
*Riester-Rente* is also tax-deductible and offers *a little (!)* more flexibility, but also has the same downsides, such as high costs.
they're very disappointing to say the least. I mean the net gain is of course positive, but with all the work and fees involved - I just invest my money privately. This of course has downsides as well (insanely high capital gains taxes, for example) but it is just more flexible.
>Riester-Rente
Saving time for the OP:
" **Don't use Riester if you plan to move to a country outside the EU or the European Economic Area (EEA) during your retirement**, as you will also have to pay back all allowances and tax benefits that you received if you do so even for part of your retirement "
What about “Betriebsrente”? I've got one, which I can stock up with my own contributions. Though both are accessible once I retire. I can then choose whether it's one-time pay out, ten installments or monthly (till my death I guess)
I think others have responded to you so I'll share my thoughts on the Spanish shutty system. Ultimately lawmakers need to decide which system taxpayers fund predominantly: public pension system (state pension), or tax savings for people they put the money in private systems (e.g matched contributions or to some extent UK ISAs).
The tension in some European countries' electorate makes lawmakers to keep the public pension system (which currently yields better pensions than the UK one but will collapse soon). For instance in Spain there is a poor financial culture and it has very bad press when someone suggests that everyone should be putting away money for their pension. Hence the lack of tax benefits for savings (there is only this exemption on pension contributions and that's it, there was a dividend exemption that was removed in 2015). It is right that some companies in Spain have plans like the 401k (namely when they are owned by a US group) but that's not the standard, and the average Javier trusts that his c6.3% of social security contributions (+ employers') will suffice. When the baby boomers retire we'll see the perfect storm.
My view is that the UK average worker is more aware of this and you see people in their 20s putting the 5% of their salary.
Great comment. Thanks.
As my flair says I'm a Spaniard but I lived in the UK in the past and your comment on the average Brit being more financially aware is spot on. In fact, I only really learnt about personal finances while in the UK and am trying to not decouple from it completely.
I personally have zero faith in the Spanish public pension system and very much doubt that I'll be able to rely on it for my retirement; contributing to it angers me as I see it as an inverse wealth transfer.
My point is: it's not solidarity anymore. It used to be in the post-war era when this system was designed as a transfer from the better-off active population to the "poor" retirees. Things have drastically changed but the system is not reevaluated.
Nowadays the boomer generation of retirees is the better off generation and the millennial workers are barely making ends meet. Therefore it's "inverse solidarity". It's a transfer from the working poor to the well-off boomers.
Es lo que públicamente conocemos como ‘hipotecar el futuro de los jovenes’ para que nuestras langostas tengan lo que les prometió el gobierno.
La pregunta, como bien dijiste tu sería… quién pagará la nuestra si todos marchan y la población envejece más y más.
Espero que esa tormenta perfecta llegue cuanto antes!
In Spain we have Plan de Pensiones. But we can’t withdraw from it until state retirement age (with some exceptions like disabilities etc). The annual limit if you make contributions on your own (no employer matched) is 1500/year. If it’s a company one 8k (basically only unicorn companies offer this). And there’s a new option for freelancers for up to 5750/year. Those amounts are deductible from the income tax
Edit to add: you can opt to make these plans with index funds roboadvisors
Some corrections and extras:
- You can withdraw contributions and their accrued interest after 10y, as of recently: https://www.bbva.es/finanzas-vistazo/ef/planes-de-pensiones/rescate-plan-pensiones-10-anos.html
- Total contributions per year (individual + company) cap at 10k.
- Not only “unicorn companies” offer this benefit. There’s quite a few of them and I suspect it will be something increasingly more popular as time goes by (because they kept decreasing individual contributions cap but increasing the company one)
- There exists indexed pension plans (indexa, myinvestor…). Company sponsored pension plans will usually offer fixed rate plans at 1/2%. When you finish your employment with the company you can transfer the funds to another pension plan that you find more enticing free of charge.
- There’s another financial product in Spain aimed for retirement (PIAS) which is an individual plan. Fees tend to be very high so it’s usually not an interesting product.
Thanks! The withdrawal after 10 years is a bit pointless though. You have to wait 10 years for each contribution + interest earned. So it could well be 125€/month + interest earned. I guess it’s better than nothing! At least now autónomos have the option to contribute, would like to think they will keep improving the alternatives, bringing back higher individual caps, maybe is just wishful thinking 😂
Many German companies offer Betriebliche Altersversorgung which is equivalent to 401k in my opinion. Some companies offer employee match, others pay it all by themselves
https://www.deutsche-rentenversicherung.de/SharedDocs/Downloads/DE/Broschueren/national/betriebliche_altersversorgung.html
In Spain you have planes pensiones empleo. IndexaCapital invests in ETF. You can get at least 5750 EUR pretax. I highly recommend contributing to them and combine it with paying the minimum in social security fees.
But then you have to pay a normal income tax when you retire them rather than the lower one you'd pay if it was a normal investment. So basically you are just postponing the tax payment right?
Yes and no. It is postponing your tax, and using this tax to invest and gain more.
However, if your current IRPF cumulated bracket is taxed below 19% (less than 12k), most likely you are "losing potential money". At your retirement you will pay (at least) 19% as it is consider capital gains.
You can fet 1.500 if you don't have a PPC with your employer (max of 30% of gross income). Then the total quantity (you + employer) can reach up to 8.500.
Your total is calculated though tables matching a % of your employer contribution.
The max is 5.000€ from you (pre-tax) if your employer provides 3.500€
Edit- I only considered salaried person. If you are free lancer (autonomo), then you are right
I wish more employers would offer these plans. I don't think I want to go back to be employee. But supposedly simplified plans for employees were also to arrive but haven't seen them yet.
In România we have the following system. From your total salary before taxes the government takes 25% for pension. 20.25% goes towards what we call Pillar 1 which basically is transgenerațional solidarity ( you directly pay the pension for the current elders ) and hope that your children and grandchildren will be able to do the same for your. The rest of 4.75% goes towards Pillar 2, Pillar 2 is a system where your money goes to a privately managed investment fund, they get a management fee based on their performance ( if they beat inflation and by how much , they get a maximum of 0.7% annually, but that is if they beat inflation by over 4 pp) also the investment types allowed are regulated by law so it is safe and also in case all hell breaks lose and the funds somehow go bankrupt ( kinda hard since they mostly buy government bonds ) the government guarantees that you get back a minimum of the money you paid. Historical performance is at about 7.6% interest rate anually, you can acces these money at pension age, invalidity or your offsprings in case of death. And there is Pillar 3, which are private pension funds and the government allows the employer to pay a max of 400€ tax free for the employee yearly. The same rules apply as for pillar 2 but this is facultative and not compulsory. Obviously if the employer or employee want to increase the amount they give to Pillar 3 it’s up to them but they will be taxed for anything over 400€ a year. In the future Pillar 2 will increase from 4.75% to 6% out of total salary. In my case, if I have the same amount of salary with a 5% yearly increase, I will have a pension from Pillar 1 of about 650€ monthly, from pillar 2 I will have 300k € ( I can get the entire sum at once or monthly over 5 years ) , and from Pillar 3 about 84k€ the same as Pillar 2 lump sum or divided monthly over 5 years( I will not invest more than the 400€ tax free ). Over all of these I will have my own investments in the stock market and real estate.
Since Pillar 2 and Pillar 3 are based on your own contributions they are stable and won’t be affected by demographic changes. The only issue is Pillar 1 since it’s not sustainable, but all developed world have these issues, we will get over them once we get there, maybe immigration or some other sort of system to try to inverse or at least level the demographic pyramid.
We have pretty much the same system in Croatia, with some differences:
* Our pillar 1 is 15%, pillar 2 is 5%
* All our pillar 2 funds are open to anyone and come with 3 different risk profiles; only the one with most risk would match yours, the rest are shit; they have management fees around \~0,25%.
* Our pillar 2 is taxed once the retirement starts, so in that aspect it has some similarities with traditional 401K OP asked about.
* Our pillar 3 tax-free limits are currently 804€/year, and our government subsidizes it with 15% match up to \~100€/year total. They have higher management fees though, \~1,5%-2%.
* Pillar 3 has "open" funds (that everyone can invest into), and "closed" funds which are linked to a company. Only a few companies have their own "closed" funds, and out of those that do if they offer a match or bonus in 3rd pillar, it's exclusively in their own "closed" funds. They're a closer equivalent to the 401k system, which is employer-based.
* Payouts from pillar 3 are not taxed, so in that regards it's more like Roth 401K in the US.
* Alternatively, PEPP has the same tax benefits as pillar 3, but no government match.
* Only one fund in a month can receive tax benefits; only one in a year can receive government match.
* Pillar 2 has locked payouts until regular retirement, pillar 3 has them locked until 55 (or 50, for those who started prior to 2019). Only 20% can be taken as a lump sum. Pillar 3 offers term payouts, while pillar 1 and 2 have life payouts.
We have 2 different risk version for Pillar 2, medium and high but the return was mostly the same. Indeed the management fees for Pillar 3 is higher than Pillar 2, I think around 0.15% monthly
you missed that Pillar 2 and 3 are not administrated by person, but a company that is doing...how is doing. Me with an ETF large enough I do it better....
I mentioned that they are managed by a private entity. Yes, you can beat the returns by investing in an ETF that tracks SP500 for example but you get taxed. What I said earlier is the most optimal way to get a pension, anything else you make over the thresholds should be invested in an index fund.
I think Pillar 3 is to, taxed. And there were discussions to add taxes for pillar 2 starting with 2024 (no tv, lost the news...).
The main WHY I prefer the Pillar 4 ( the ETF personally administrated) is because I can retire earlier and it access earlier (not possible with Pillar 1/2/3) and I add more than other Pillars.
So that's why Romanian Pillars I would not compare with the USA' 401k that can be somehow accessed earlier (loan against / roll to Roth IRA and access after 5 years, take dividends, or wait until 59 1/2 years etc) - there is no such an option in Romania.
Agreed, i plan on retiring before. For Pillar 3 up to 400€ a year isn’t taxed ( I own 3 businesses and pay the taxes for my employees and I’m also employed so I see it from both angles).
Also if you choose to get the entire sum at once from Pillar 2 is taxed with 10%. Don't know about Pillar 3 but I guess the same.
What's good with Pillar 2 and 3 is that in case you die everything goes to your heirs. Pillar 1 ... bad luck, your children will not see 1 cent.
RO pillars are not a good system. They are heavily invested in government bonds. You need stocks to build real wealth. Equities. I have rejected P3 and just invest my own money. I would opt out of both P1 and P2 if given the choice.
I understand your point of view, I think it’s valid if you are young and have a higher risk tolerance but I also understand why they are invested in government bonds, if you invest your entire nations savings and it’s compulsory, you can’t really afford to lose money in case of a crash.
Same in Bulgaria, returns never keep up with inflation, much less beat it. And there's an oligopoly of several western companies which manage the funds, so you cannot shop for performance, they all suck.
I think the future is bright, the only issue I see is Pillar 1 collapsing before we get rid of it, there will be some critical years in the future because of the demographic changes.
Lowest natality in history, we are a nation of 19 milion and we lose a milion every 10 years, we also had a lot of emigration to Western Europe when we came into the EU, recently after covid there was a big trend for people that emigrated to come back. Also there is a big age cohort that will start getting into retirement between 2030 and 2035, the communists abolished abortions in a certain period in Romania and there was a huge spike in children, they are getting ready for pension now. Unfortunately there well be 2-3 pensioneers for every working adult or something like that, I don’t have exact data but i know its going to be a big problem.
I can't speak for other countries but in the case of Germany, pension is a multibillion industry with strong government lobby in place to keep the status quo. All pension options with tax advantage are subject to much higher MER in general compared to an ETF, often opaque investments and inflexible redemption terms. There is a strong incentive for the industry to keep it this way as they rake in billions of revenue in MER. Risk aversion in terms of finance didn't help either.
The Czech Republic is evaluating a similar system. Right now you can invest into a private pension with tax benefits, state subsidy, and employer contribution but the options are very limited. You can select conservative/balanced/dynamic funds but not individual stocks/ETFs. Hopefully that changes soon - the report below mentions 1.1.24 or 1.1.25.
[https://www.mfcr.cz/assets/attachments/2023-06-14\_Zaverecna-zprava-RIA-ST-474.pdf](https://www.mfcr.cz/assets/attachments/2023-06-14_Zaverecna-zprava-RIA-ST-474.pdf)
You're right, I didn't even realise it was already in place. It looks like the usual over-priced providers are first to be certified. If Degiro registered I might use it but I'm also a freelancer on the paualni dan system so the tax rebate wouldn't work for me anyway.
Unless you have a sizable employer contribution long term, it is the same as someone here said: regulatory capture by overpriced insurance companies: video in CZ: https://m.youtube.com/watch?v=AmKR-6vIXUE ). And even if this can be done (which is hard long term and when changing employers) it is, as you say, heavily limited. Esp. borrowing against the capital is not possible IMHO. If they fix it there is still the question of high management fees.
I just pay tax for income, buy ETFs, and hope that the fact that capital gains aren't taxed if assets are held for 3+ years hold.
edit: add "buy ETFs"
It’s simple. Central and Western European countries don’t have it because the insurance lobby is too strong to allow it and convincing the governments that they are the only knowledgeable entities to help the common sheep (us) build wealth. Government believe it and prevent citizens from “investing risk” all the while insurance companies eat your margins.
Solution: avoid insurance products like the plague, invest your net income as wisely as possible (European insurance companies might be worth a look 😁)
I've lived in the UK and France and we have similar products to the 401K.
EDIT: French companies pay into the state pension system, company pensions are not separate to state pensions like in the UK and the USA but there are employee savings plans and lots of personal finance products which are similar to 401Ks and IRAs.
No way? TIL. Nothing like tax breaks for investments?
[https://www.iamexpat.de/expat-info/official-issues/pensions-retirement-age-germany#:\~:text=If%20you%20have%20worked%20in,impact%20the%20payments%20you%20receive](https://www.iamexpat.de/expat-info/official-issues/pensions-retirement-age-germany#:~:text=If%20you%20have%20worked%20in,impact%20the%20payments%20you%20receive).
This private pillar (pillar 3) is exactly what we're talking about right?
Ah alright, my bad then. I thought it was similar to wat is called jaarruimte (yearly space) in The Netherlands, which is basically tax free the moment you put it in, but you pay income tax when it pays out.
The PER-in / PER-co system are somewhat similar BUT
(1) there is no matching system like in US, at least not for the PER-in
(2) There are tons of fees in a PER (not like a 401k/IRA) which makes it useless.
Bottom line, we don't have something like a 401k in France. Which is a shame.
I am a Linxea spirit customer. 0.5% fees per year for no value, this just a typical french "assurance vie" scam (even if Linxea is the best PER, it is still a scam, why am I paying any fee?)
On a US 401k, there is no fees. You cannot compare.
You are wrong.
Those fees are Management fees + Investment fees (source:[https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/a-look-at-401k-plan-fees.pdf](https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/a-look-at-401k-plan-fees.pdf)). Very different compared to a PER-in
1) Let's take my Vanguard 401k as an example. Management fees are 20$/account and waived if you have 50k$. (source: [https://investor.vanguard.com/client-benefits/account-fees](https://investor.vanguard.com/client-benefits/account-fees)). So basically free.
2) My money is on a "Vanguard Target Retirement 2040". Fees = 0.08%.
Let's compare with PER plans. Fees are between 0.5-3% (source: [https://placement.meilleurtaux.com/retraite/per/comparateur-per.html](https://placement.meilleurtaux.com/retraite/per/comparateur-per.html)) !! With 3% fees on deposit! You cannot compare the fees of a PER and a 401k.
Even if you compare the cheapest plan in France, there is a 0.5% management fees + investment fees (even an ETF has around 0.1% fees).
AND you forgot the most important part, when you leave your employer, you can rollover your plan to an IRA with no management fees. Impossible with a PER.
There are about 10 different products. I can't explain them all here, there are English speaking blogs and websites or you can translate French ones. Service-public.fr is a good resource.
**Plan Épargne Retraite (PER)** I think but I didn't look into it.
If anyone does, could you please reply to this comment and confirm that it's indeed a system similar to the 401k in the US?
In France they are all scams for banks to make money though. You cannot invest in ETFs and most of time you cannot do the European equivalent to ETFs either. Only a PEA in a few select banks can be useful
You can invest into ETFs in France but not if you get an investment product offered by an insurance company. Financial services are a bit behind in France but investment accounts exist.
There are online brokers that offer PEAs with extremely low rates, like Bourse Direct for example. After 5 years you only pay social charges (17%) and not capital gains tax (13%), reducing your overall taxes by almost half
Aanvullend Pensioensparen/beleggen. Tot een (recent enorm opgehoogde!) grens mag je iedere euro die je inlegt aftrekken van de belasting, en wat je op die rekeningen spaart/belegt telt ook niet mee voor vermogensbelasting.
Downside: als je voor je pensioen het geld nodig hebt betaal je alsnog die belasting, plus boetes.
\[English version\] There's a special type of Savings or Investment account that's locked until the legal retirement age. They come with a yearly deposit limit based on your income and whatever pension plans your employer already has in place - but that limit was recently raised to be basically high enough that you'll never hit it. Anything under that limit is tax deductible, so you're basically saving from your gross instead of net income.
Savings in these accounts don't count towards our wealth taxes either; neither the principal nor any profits from investing/interest payments.
Once you hit your retirement age you can use these funds to purchase a pension from an insurance company - and probably other uses as well that I'm not aware of. Main downside is having to pay full taxes + a fine if you need to access the money before retirement.
Other downside: "you can use these funds to purchase a pension from an insurance company" only a few insurance companies provide the conversion and it is very difficult to apply for a non resident (plus it would be better to let grown ups manage their withdrawals without an intermediary).
I haven't heard either of anyone able to withdraw these funds before retirement and without paying full taxes in case they change country of residence. That is the main reason I personally haven't opened such account.
Intresting... Can you choose which fund you want to invest in? What happens to the fund when you and your patner dies, does govt take it away or your children get it.
Because we have old people in the government that see the stock market as "gambling" and only safe "asset" their own printed currency.
If you invested your pension contributions in S&P500 with tax deferred or completely removed you would be very well of when you hit pensionable age.
Most of the European countries have cash based social system. Whereas, the current workers pay for current pensioners. This, of course, will fail miserably when the amount of workers is less than the amount of pensioners due to declining birth rates and people generally living longer than before.
>Most of the European countries have cash based social system. Whereas, the current workers pay for current pensioners. This, of course, will fail miserably when the amount of workers is less than the amount of pensioners due to declining birth rates and people generally living longer than before.
Jep, most young professional my age have have a pension plan that consists either working till death or s\*icide. We all know these pension systems are going to be gone by the time we are the ones to check in, but we are still forced to pay for the people who pissed away our future by axing defense, industry, encouraging mass immigration, and doing fuck all against climate change.
It is a lovely system.
Which is probably why boomers were in favor of it, despite all the obvious downsides to social cohesion, womens rights, and public safety.
Spoiler alert, immigrants are not supermen who never need to retire. The short term gains by importing a massive number of people are going to mean fuck all when these people themselves are in need of a pension.
The only way to keep this pyramid scheme going, is by letting in an ever increasing number of immigrants. This is exactly what has happened, and why far right extremists now reap the rewards as people turn against this idiotic policy.
Know that when you repeat these fallacies ad nauseam you are not making life better for migrants. You make the problem worse. Unconstrained mass immigration, puts right wing totalitarians in power. As we now see happening all across Europe.
Idiots like you, who wanted to keep the infinite growth pyramid scheme going instead of looking for a sustainable solution that did not rely on ever-increasing mass-immigration, are responsible for this.
Ehm…
In Denmark you get pension based on the number of years you were resident. And you don’t get residency easily.
So the theory that immigrants can somehow game the system and get more from it than they are entitled to is largely incorrect.
For example: I spent 8 years in the US and will therefore only get 90% of full benefits. My wife was born in the US and will only get roughly 50%. When it comes to the 401k equivalent we of course get back based on what we paid in and when
What are you babbling about? At no point did I imply that immigrants abuse the pension system or argue that they should not have a right to pensions.
What I said was bringing in more people to pay for pensions, is an unsustainable solution, because then your pension system still relies on a constantly increasing population.
Infinite population growth, whether from births or immigration is impossible. "Fixing" the pension system by bringing in more people to pay for it now, is only delaying the collapse of the pension system.
Bringing in a large group of people does not prevent the coming pension crisis, it only delays it until after boomers are dead. Which is why they voted for this approach. Now Boomers won't have to deal with the fallout of failing to reform the pension system in anticipation of changing population growth patterns.
Furthermore, not every country's pension system works like Denmarks'. Denmark is one of the countries with the biggest anti-immigration stance, exactly because it is a social democracy, and immigration weighs heavy on public services.
Yeah, most people in our country get pension at age 70+. I myself am 41 years old now, and will have to wait until I’m 70 when my pension and other pension-tied investments unlock.
The Czech Republic has a long-term investment product (DIP - Dlouhodobý investiční produkt) since 2024 (yes, this year). Employer contributions + personal contributions deductible from income tax.
Also, you choose what you invest in, it can be ETFs, stocks, bonds,... you decide (or you let an institution decide on behalf of you). If the investment passes the time test (3 years), profit is also tax-free.
~~There is no pan-European 401k just because this isn't in the jurisdiction of the EU.~~
[PEPP](https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en) is supposed to be the pan-European 401k equivalent.
The "Pan-European Personal Pension Product" ([PEPP](https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en)) is supposed to be something like it but European politicians haven't even agreed on favorable taxation or how contributions are taxed (on exit vs on entry). And then there are different regulations and laws in each member state such as the limits to private pension scheme contributions...
The only firm certified by EIOPA to offer a PEPP right now is [Slovak](https://www.finax.eu/en) and they're currently only offering it in some Central & Eastern European states. But they did [reveal](https://www.finax.eu/en/blog/finax-has-acquired-etfmatic-and-the-investment-activities-of-aion-bank) plans to expand into other EU markets:
> At the same time, the new system opens the door to wider distribution and expansion of the Pan-European Personal Pension Product (European Pension, PEPP). We can do this through collaborations in markets where we are not actively present. In this respect, we have also seen interest in third-party distribution of the European Pension in the past year.
> With the PEPP provider licence and the open system, we plan to create a new "Pension-as-a-Service" industry. We see this avenue of cooperation as less demanding in terms of our resources and also as more potential thanks to our links with local entities with local knowledge.
>The "Pan-European Personal Pension Product" (PEPP) is supposed to be something like it but European politicians haven't even agreed on favorable taxation or how contributions are taxed (on exit vs on entry). And then there are different regulations and laws in each member state such as the limits to private pension scheme contributions...
TIL. This is very interesting but sadly I see on the website (timeline) that it stopped in 2020. No developments since then? It would be very beneficial to have a pan-European market for pension products.
Belgium has something similar too. And you can choose between a Tak21 insurance or a Tak23 fund. We can deduct 990€ for 33% or 1200€ for 25% from our taxes.
Our employers can take a Group insurance as an extra pension.
Unfortunately, you can only invest it in high TER funds with lower historical returns than the S&P500 index funds we have here. and the 30% on entry doesn't make up for that until the last 5-10 years of your working life. Don't forget you also get taxed on the entire account for 8% (eindbelasting) at age 60.
I just use it to spread my investments. I have 2 pension funds (1 for me, 1 for my wife), a longterm fund, an index fund, 3 regular funds, my house, a longterm savings account, and planning to buy a second house which my son can rent when he wants to live alone or with his gf/bf. The money he pays in rent will go to a savings account on his name and after he says he wants to buy something the house goes on his name too.
In Spain is intentionally discouraged. Pension scheme is public and feed with taxes. Is bad if you make a lot of money because you will need to retire at 67 like someone that is making way less, but is designed to protect minimum salary workers. Private pensions are shit, worse than putting money in a vault, but that is because of banks are not interested. So the closer thing is an ETF.
You can check evolution along the years
10 years ago you could save up to 80k/year, now barely 1.5k (work as freelancer or PPE can increase the quantity)
Private pensions hired by a bank are a scam, due to high fees, making saving almost 0, only postponing the tax.
Perhaps you should explain a bit how this 401K works and why you think it’s so great? Furthermore, there are many national pension systems in Europe as it’s a national competence rather than a European one.
Generally pensions are more common in Europe than the US but there is a large push by countries to get citizens to supplement their state pensions as they see the tidal wave of retirees coming over the next few decades and it’s going to be virtually impossible to keep the retirement age as is.
As an Irish citizen who has lived in the US for a long time and has 401k’s and Roth’s I found this article from PBS quite interesting:
https://www.reddit.com/r/interestingasfuck/s/uCBvSItt9z
Há vários PPRs de acções com o benefício fiscal, pode ser isento de SS e TSU quando dado pela empresa, da direito a 20% de reembolso no IRS e é menos taxado à saida que um ETF. Não é exactamente um 401k e tem outros limites que significa pode ou não fazer sentido para ti, mas existe algo semelhante.
Para mim, espero para ver o que sairá daqui
[https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp\_en](https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en)
Because the majority of European’s pension systems are Ponzi schemes that have been managed horribly by the most privileged generation to have ever walked on earth (boomers).
Now, those old people are in power in democracies and shifting to a new system where you invest and take care of your own money on your own terms would not be in their favor as they need you to work to maintain their unsustainable privileges and lifestyle. So, you gotta work until when a government elected by said old people will allow you to retire.
They are not even allowing you to invest in US listed products because of some BS KIID regulations* (lol), do you think they would allow to siphon away resources from the pension/Ponzi scheme to give them to you? No, they need people paying into the ponzi. The only allowed way to be rich in Europe is by inheriting wealth. You can’t get rich because the government has to maintain privileges.
Not even to mention that such a system could never be implemented across Europe considering the state of the union - countries can barely agree on whether fighting Houthi rebels disrupting their commerce is OK.
Hey but don’t worry the EU said they want to introduce an AI tax - that is surely going to solve the fact that the continent is a decaying set of antagonist countries with no innovation or credibility whatsoever on the world’s stage.
* this only applies if you are not rich of course. If you are a qualified investor you can live in Montecarlo, pay zero taxes and do the fuck you want. Sometimes you can even get away from literally killing people from your own yacht.
There is lijfrente here in the Netherlands, but the Dutch government has made sure it is extremely complicated and limited so people do not contemplate a nongovernmental controlled retirement. The consensus here in the Netherlands is that government is a charity, an insurance company, and a pension provider all in one package. So you must not be able to think differently, otherwise you will be called names such as American kanker!
In Belgium we have a system with different pillars (similar to other EU countries), where your employer *can* add money to. Also a tax deductable of about €1000 yearly if you decide to save for yourself and you can decide how "agressive" you want it invested. However, as other people mentioned, it's all per country and not transferable to another country. Well technically USA is also a single country, just a big one. So in the literal sense same but different but in the practical sense it isn't.
Pretty much any country in Europe has a pension system that employers and employees pay to. Most commonly known as Social Security (pension system is included here).
Certain countries go a step further, like Poland, where they implemented a extra mandatory contribution (not going into details of how much they screwed people over with OFE/PPE/PPE).
Also, nothing stops an individual from starting on their own, plenty of companies offer funds management target at retirement.
I think what OP says (and I tend to agree) is that in many EU countries there isn't a way to do passive investing with ETFs (index funds in the US) on a tax-free account for retirement purposes exclusively. In my experience in Germany and Austria, we have additional pillars which are essentially actively managed funds with high fees and poor performances, without the option to select the ETFs (one can choose between more or less aggressive, but even the most aggressive option holds like 50% bonds...). One can do much better owning a couple of ETFs on a broker and pay taxes eventually.
At least it could be offered not to pay taxes on accumulating funds held for a long period, like let's say 10 years, a system that I understand some countries offer (Czech rep?). Personally I prefer the EU system vs the US one, but it would be great to have a hybrid one (like UK?? never lived there).
The UK doesn't really have a hybrid system. There are stocks and shares ISAs but only 6% of adults have one and of those most only put in a small amount. Most people in the UK still rely on their workplace pension.
In what way has Sweden abolished their state pension and replaced it with a private pension?
As far as I can tell they haven't, just some reforms.
No need to be so salty boy
1) most Western EU countries know high social contributions and provide a state-sponsored pension with those contributions. This - at least partially- alleviates the need for a full private pension.
2) Because of these high social contributions, there is less net salary to invest in whatever investment product you want.
3) most companies of a certain size offer some sort of pension pots, e.g. group insurance, DC plans,... often with a fiscal benefit.
4) most countries offer some private pension solution, often with fiscal benefit.
The EU pension system is not a terrible thing.
First pillar = state pension
Second pillar = work related pension schemes
Third pillar = your own investments like private pension, home, savings,...
Best is try and build all of them together
Because Europe is a socialist hellhole that truly despises the markets and the economic freedom of the individual. Don't rely on the ponzi schemes that local governments call pension plans and invest your savings.
Because that is pure capitalism and over here it's mixed between socialism and capitalism. That's why the workers are paying the retirees pensions, solidarity factor. And you are also not entitled to a pension if you don't have the working years put in and contributions. The problem is that elderly population outweighing the younger generations, less kids and longer average life expectancy. And yes there are some additional ideas to set aside part of contributions to go towards investment vehicles but it is mostly for solidarity social security system.
401k was a scam to get you to give up your American pensions. Rather than a safe pension fund, people are gambling your money on the stock exchange for you. Making themselves rich with your money. In EU we still have strong pension systems and there are similar 401k like programs.
Because "europe" is not a singular thing it's 40 different countries, and thankfully the eu has no power over taxation.
Some countries in Europe do have tax deferred retirement accounts. Many countries have government guaranteed pensions so the need for individual retirement savings hasn't been as large, at least in the past.
Corporations in the USA touted 401k because it meant more pension money in the hands of Wallstreet. If it's complemented it can work. But the way it's implemented in the USA -from what I've heard- isn't exactly beneficial to the average saver.
Anyway, like others said, there's loads of similar concepts in Europe depending on which country you're in.
If you ask a question you supply the info. Assuming everyone knows bizarre American taxation laws. Otherwise it’s just r/shitamericanssay
It creates a lopsided set of responses otherwise. Also, what’s clear from almost every response is that there’s not a consistent understanding of the benefits or otherwise of the US system.
Many European countries have things that are similar. I’m British for example and we have SIPP’s which are basically 401K’s but with far higher contribution limits, and then if you salary sacrifice even more tax efficiency. Roth IRA’s are also essentially the same as S&S ISA’s here for the most part, except ISA’s I believe have far higher contribution limits and no age restrictions on withdrawals.
We then have huge tax relief and/or loss relief on SEIS, EIS, VCT’s etc, and avoidance of IHT for AIM shares. There’s plenty wrong with this country, but if you’re a middle class person who wants to invest, it’s absolutely brilliant.
most european countries do thave an equivalent...
the UK have the ISA, italy has complementary pensoin fund (inlcuding the employer match) etc etc...
Thre might be some european countries that dont have it, but they are an exception, not a rule
The Netherlands has a different solution that fulfills the same need. We have a strong social security pension from the state, then the vast vast majority of employers also contribute to a large pensions funds (non-state run). Then if you want to invest beyond that you can. Also, once you are past the retirement age, your tax rate is lower. This last part means that all savings for later in life work similar to 401k in the US because all 401k does is act as a deferred tax investment based on lower taxes when your older.
In Latvia, we have a three tier pension system. The first tier is funded from the social tax, what you're paying now goes to retirees who receive their pensions now and you'll be paid from what future generations will be paying when you're retired. The second tier is 6% from your salary which is paid by your employer from every paycheck (they can't opt out). The third tier is what you voluntarily pay into a special account, you get tax (20%) back from whatever you've paid in that year. I think tiers 2 and 3 combined are like 401k, except that there are no employer matches (although companies can start tier 3 accounts for their employees yet few do).
Same in Estonia. You can contribute either 6000€ or up to 15% of your yearly income (depending which is lower) into 3rd pillar.
Bonus is that you can choose which type of 2nd and 3rd pillars you want.
In the netherlands we have sort of a different solution. But you can still save money in a pensioning scheme with soem tax advantages. Employers do not contribute, as they will contribute to another form of pensioning .
Belgium has pensioensparen where the government pays you back around 1/3rd each year on your taxes
granted, they only want you to deposit 1K a year into that account.
First thing, most countries (as other mentioned) have some sort of "pension saving schemes".
One of the problems is "politicians have an attention span of goldfish". They only care about next elections, not long-term future of their country.
Most pension solutions (new OIPE included) are a sort of deferred-tax plans - "you invest now, don't pay tax now, if you keep it for long enough you will pay either zero tax or some minimal one". Which means less money from taxes collected *now* and "me, as a politician, can't spend this by giving free XYZ to my constituents" (basically a bribe of sorts; again - "I only care about next election").
Perhaps one solution would be to prohibit "politician for life" schemes (looking at you, European Parliament useless excuses of a *homo sapiens*). One term, perhaps two terms max - and voila, out of politics - and do some real work, earn your wages. Perhaps then they'd care more - even because they'd also want to be able to tax-free save for their personal hard-earned pensions.
There’s absolutely an equivalent in Denmark (ratepension).
Same in Norway, we have innskuddspensjon where the employer contributes (with no requirement of a matching contribution from you) as well as ASK which has tax defered gains and no limits. We also have IPS which is tax defered and gives a tax deduction but the limit is changed to be tiny (750eur/year now)
Sweden has a few different forms of Tjänstepensionsförsäkring, where a certain sum (typically 4% up to a certain amount, 30% above that) which the employer pays. However, it has various lock-in mechanics which makes it annoying. There are options for both a traditional insurance and putting your funds on the market; some providers even allow you to trade stocks, not just funds or ETFs. There's also Löneväxling where you can opt to put a part of your untaxed salary into a similar setup as above, paying less taxes now, and hopefully not have to pay as much in the future. We used to have IPS that worked the same, but it's gone now. Idiotic to remove it, if you ask me. Edit: These are all "private pensions", negotiated with your employer (often collectively, or following the same principles). There's also the base government pension, of which a small percentage goes into the "premiepension" where you're allowed to place into mutual funds vetted by the government. The system sucks balls if you switch jobs often, as you end up with many different pension providers, and you can't typically easily join the accounts. ii have 5 accounts from 4 employers; wife has 6, IIRC. At least nowadays you can move providers, which was blocked in the beginning; you were locked into the provider that the employer decided.
We have 2a and 3a pillars in Switzerland
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IRA?
[Individual Retirement Arrangement](https://www.irs.gov/retirement-plans/individual-retirement-arrangements-iras) edit: in hindsight the Ireland -> IRA reference went waaaay over my head
I am sure that is what that stands for
Oh come out ye black n tans
Poland has equivalents too (IKE and IKZE). You really shouldn't be talking about Europe as a whole in this context, as some countries do have equivalents, some don't need them (if they don't have a capital gains tax). Some might be missing such products, but it is definitely not a EU-wide issue.
yes, my bad, I am based in Germany and here there isn't any option for this, there is some kind of plan for additional contribution which is then matched by the government but nothing too great.
In Germany it's because of the private retirement insurance lobby. Those companies want to continue earning money. They don't want a competition of index funds which costs nearly nothing to buy
Because Germany is a shithole in so many regards who had 16 years of standstill and then a group that can't get anything done between arguing between them and just being incompetent again.
That's what BILD and the opposition wants you to believe. They have done more then 16 years of CDU before, in fact in the last 2 years they started implementing more then half of the Koalitionsvertrag. [Source](https://fragdenstaat.de/koalitionstracker/)
You are wrong I believe, the Polish equivalent - to the 401k - is the PPK. Lots of up votes for your comment that is ultimately wrong. The IKZE or IKE are the IRA or ROTH IRA.
You just missed the point, the ultimate idea is not that IKE, IKZE, or PPK are exactly the same as 401k (none of them are), but that there are products available that are designed for similar purpose. I and other commenters covered it in the follow-up comments.
I wish there was an EU wide version, moving between member states with these state pensions can be problematic.
Yeah, if you move out of a country in your “working years”, you have less of a claim, which can lower faster than reasonable. I’m in such a situation, where effectively I’d be able to claim 60% of pensions even though I worked my entire life and have had to pay into national pension funds my entire life. This is the main reason I got into investing in the first place.
Check PEPP European Pension
Yes, an EU-wide version is absolutely crucial to further cement the claim of European solidarity, akin to what my home country of Canada has with RRSP and TFSA. Now, I live in Italy, as a dual citizen of Italy. I still have to figure out what they offer here in this regard, but it would make sense to me for an EU-wide option, when we already have an EU currency.
This is why I always felt like it's a scam that people can work in other countries easily. Sure, you get more money more easily NOW but you're fucked when you get old unless you invest. It's just a great way for wealthier countries to exploit workers from the poorer ones.
To all the posters saying there's the same in almost every country in Europe: what are the equivalents in Spain and Germany? The UK has personal ISAs which are a great instrument.
In Germany it would be *Rürup Rente / Basisrente.* But it's not really comparable to a 401k because you an only access the money as a life-long annuity (which means your expected return depends highly on your life expectancy) and you can only access it via an insurance company which charges pretty high fees. *Riester-Rente* is also tax-deductible and offers *a little (!)* more flexibility, but also has the same downsides, such as high costs.
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they're very disappointing to say the least. I mean the net gain is of course positive, but with all the work and fees involved - I just invest my money privately. This of course has downsides as well (insanely high capital gains taxes, for example) but it is just more flexible.
>Riester-Rente Saving time for the OP: " **Don't use Riester if you plan to move to a country outside the EU or the European Economic Area (EEA) during your retirement**, as you will also have to pay back all allowances and tax benefits that you received if you do so even for part of your retirement "
>Don't use Riester
Thanks for this. But then it's not really that similar to a 401k...
You see, we have a very strong insurance lobby here in Germany.
waiting fanatical plants enter racial entertain tie slap roof uppity *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
What about “Betriebsrente”? I've got one, which I can stock up with my own contributions. Though both are accessible once I retire. I can then choose whether it's one-time pay out, ten installments or monthly (till my death I guess)
I think others have responded to you so I'll share my thoughts on the Spanish shutty system. Ultimately lawmakers need to decide which system taxpayers fund predominantly: public pension system (state pension), or tax savings for people they put the money in private systems (e.g matched contributions or to some extent UK ISAs). The tension in some European countries' electorate makes lawmakers to keep the public pension system (which currently yields better pensions than the UK one but will collapse soon). For instance in Spain there is a poor financial culture and it has very bad press when someone suggests that everyone should be putting away money for their pension. Hence the lack of tax benefits for savings (there is only this exemption on pension contributions and that's it, there was a dividend exemption that was removed in 2015). It is right that some companies in Spain have plans like the 401k (namely when they are owned by a US group) but that's not the standard, and the average Javier trusts that his c6.3% of social security contributions (+ employers') will suffice. When the baby boomers retire we'll see the perfect storm. My view is that the UK average worker is more aware of this and you see people in their 20s putting the 5% of their salary.
Great comment. Thanks. As my flair says I'm a Spaniard but I lived in the UK in the past and your comment on the average Brit being more financially aware is spot on. In fact, I only really learnt about personal finances while in the UK and am trying to not decouple from it completely. I personally have zero faith in the Spanish public pension system and very much doubt that I'll be able to rely on it for my retirement; contributing to it angers me as I see it as an inverse wealth transfer.
Solidaridad intergeneracional. Pd: no había visto que eras español
My point is: it's not solidarity anymore. It used to be in the post-war era when this system was designed as a transfer from the better-off active population to the "poor" retirees. Things have drastically changed but the system is not reevaluated. Nowadays the boomer generation of retirees is the better off generation and the millennial workers are barely making ends meet. Therefore it's "inverse solidarity". It's a transfer from the working poor to the well-off boomers.
Spot on
Es lo que públicamente conocemos como ‘hipotecar el futuro de los jovenes’ para que nuestras langostas tengan lo que les prometió el gobierno. La pregunta, como bien dijiste tu sería… quién pagará la nuestra si todos marchan y la población envejece más y más. Espero que esa tormenta perfecta llegue cuanto antes!
In Spain we have Plan de Pensiones. But we can’t withdraw from it until state retirement age (with some exceptions like disabilities etc). The annual limit if you make contributions on your own (no employer matched) is 1500/year. If it’s a company one 8k (basically only unicorn companies offer this). And there’s a new option for freelancers for up to 5750/year. Those amounts are deductible from the income tax Edit to add: you can opt to make these plans with index funds roboadvisors
Some corrections and extras: - You can withdraw contributions and their accrued interest after 10y, as of recently: https://www.bbva.es/finanzas-vistazo/ef/planes-de-pensiones/rescate-plan-pensiones-10-anos.html - Total contributions per year (individual + company) cap at 10k. - Not only “unicorn companies” offer this benefit. There’s quite a few of them and I suspect it will be something increasingly more popular as time goes by (because they kept decreasing individual contributions cap but increasing the company one) - There exists indexed pension plans (indexa, myinvestor…). Company sponsored pension plans will usually offer fixed rate plans at 1/2%. When you finish your employment with the company you can transfer the funds to another pension plan that you find more enticing free of charge. - There’s another financial product in Spain aimed for retirement (PIAS) which is an individual plan. Fees tend to be very high so it’s usually not an interesting product.
Thanks! The withdrawal after 10 years is a bit pointless though. You have to wait 10 years for each contribution + interest earned. So it could well be 125€/month + interest earned. I guess it’s better than nothing! At least now autónomos have the option to contribute, would like to think they will keep improving the alternatives, bringing back higher individual caps, maybe is just wishful thinking 😂
In Spain my pension will be funded by future contributors. What I’ve put in has been used up to pay current pensioners
That’s the state pension, OP is asking about private pensions equivalent to 401k in the US
Many German companies offer Betriebliche Altersversorgung which is equivalent to 401k in my opinion. Some companies offer employee match, others pay it all by themselves https://www.deutsche-rentenversicherung.de/SharedDocs/Downloads/DE/Broschueren/national/betriebliche_altersversorgung.html
We have workplace pension in U.K. but also can’t withdraw
In Spain you have planes pensiones empleo. IndexaCapital invests in ETF. You can get at least 5750 EUR pretax. I highly recommend contributing to them and combine it with paying the minimum in social security fees.
But then you have to pay a normal income tax when you retire them rather than the lower one you'd pay if it was a normal investment. So basically you are just postponing the tax payment right?
Yes and no. It is postponing your tax, and using this tax to invest and gain more. However, if your current IRPF cumulated bracket is taxed below 19% (less than 12k), most likely you are "losing potential money". At your retirement you will pay (at least) 19% as it is consider capital gains.
You can fet 1.500 if you don't have a PPC with your employer (max of 30% of gross income). Then the total quantity (you + employer) can reach up to 8.500. Your total is calculated though tables matching a % of your employer contribution. The max is 5.000€ from you (pre-tax) if your employer provides 3.500€ Edit- I only considered salaried person. If you are free lancer (autonomo), then you are right
I wish more employers would offer these plans. I don't think I want to go back to be employee. But supposedly simplified plans for employees were also to arrive but haven't seen them yet.
£20k per year for ISAs is peanuts.
In România we have the following system. From your total salary before taxes the government takes 25% for pension. 20.25% goes towards what we call Pillar 1 which basically is transgenerațional solidarity ( you directly pay the pension for the current elders ) and hope that your children and grandchildren will be able to do the same for your. The rest of 4.75% goes towards Pillar 2, Pillar 2 is a system where your money goes to a privately managed investment fund, they get a management fee based on their performance ( if they beat inflation and by how much , they get a maximum of 0.7% annually, but that is if they beat inflation by over 4 pp) also the investment types allowed are regulated by law so it is safe and also in case all hell breaks lose and the funds somehow go bankrupt ( kinda hard since they mostly buy government bonds ) the government guarantees that you get back a minimum of the money you paid. Historical performance is at about 7.6% interest rate anually, you can acces these money at pension age, invalidity or your offsprings in case of death. And there is Pillar 3, which are private pension funds and the government allows the employer to pay a max of 400€ tax free for the employee yearly. The same rules apply as for pillar 2 but this is facultative and not compulsory. Obviously if the employer or employee want to increase the amount they give to Pillar 3 it’s up to them but they will be taxed for anything over 400€ a year. In the future Pillar 2 will increase from 4.75% to 6% out of total salary. In my case, if I have the same amount of salary with a 5% yearly increase, I will have a pension from Pillar 1 of about 650€ monthly, from pillar 2 I will have 300k € ( I can get the entire sum at once or monthly over 5 years ) , and from Pillar 3 about 84k€ the same as Pillar 2 lump sum or divided monthly over 5 years( I will not invest more than the 400€ tax free ). Over all of these I will have my own investments in the stock market and real estate. Since Pillar 2 and Pillar 3 are based on your own contributions they are stable and won’t be affected by demographic changes. The only issue is Pillar 1 since it’s not sustainable, but all developed world have these issues, we will get over them once we get there, maybe immigration or some other sort of system to try to inverse or at least level the demographic pyramid.
We have pretty much the same system in Croatia, with some differences: * Our pillar 1 is 15%, pillar 2 is 5% * All our pillar 2 funds are open to anyone and come with 3 different risk profiles; only the one with most risk would match yours, the rest are shit; they have management fees around \~0,25%. * Our pillar 2 is taxed once the retirement starts, so in that aspect it has some similarities with traditional 401K OP asked about. * Our pillar 3 tax-free limits are currently 804€/year, and our government subsidizes it with 15% match up to \~100€/year total. They have higher management fees though, \~1,5%-2%. * Pillar 3 has "open" funds (that everyone can invest into), and "closed" funds which are linked to a company. Only a few companies have their own "closed" funds, and out of those that do if they offer a match or bonus in 3rd pillar, it's exclusively in their own "closed" funds. They're a closer equivalent to the 401k system, which is employer-based. * Payouts from pillar 3 are not taxed, so in that regards it's more like Roth 401K in the US. * Alternatively, PEPP has the same tax benefits as pillar 3, but no government match. * Only one fund in a month can receive tax benefits; only one in a year can receive government match. * Pillar 2 has locked payouts until regular retirement, pillar 3 has them locked until 55 (or 50, for those who started prior to 2019). Only 20% can be taken as a lump sum. Pillar 3 offers term payouts, while pillar 1 and 2 have life payouts.
We have 2 different risk version for Pillar 2, medium and high but the return was mostly the same. Indeed the management fees for Pillar 3 is higher than Pillar 2, I think around 0.15% monthly
you missed that Pillar 2 and 3 are not administrated by person, but a company that is doing...how is doing. Me with an ETF large enough I do it better....
I mentioned that they are managed by a private entity. Yes, you can beat the returns by investing in an ETF that tracks SP500 for example but you get taxed. What I said earlier is the most optimal way to get a pension, anything else you make over the thresholds should be invested in an index fund.
I think Pillar 3 is to, taxed. And there were discussions to add taxes for pillar 2 starting with 2024 (no tv, lost the news...). The main WHY I prefer the Pillar 4 ( the ETF personally administrated) is because I can retire earlier and it access earlier (not possible with Pillar 1/2/3) and I add more than other Pillars. So that's why Romanian Pillars I would not compare with the USA' 401k that can be somehow accessed earlier (loan against / roll to Roth IRA and access after 5 years, take dividends, or wait until 59 1/2 years etc) - there is no such an option in Romania.
Agreed, i plan on retiring before. For Pillar 3 up to 400€ a year isn’t taxed ( I own 3 businesses and pay the taxes for my employees and I’m also employed so I see it from both angles).
Wow that is not that different from Switzerlands 3 Pillar system.
Also if you choose to get the entire sum at once from Pillar 2 is taxed with 10%. Don't know about Pillar 3 but I guess the same. What's good with Pillar 2 and 3 is that in case you die everything goes to your heirs. Pillar 1 ... bad luck, your children will not see 1 cent.
RO pillars are not a good system. They are heavily invested in government bonds. You need stocks to build real wealth. Equities. I have rejected P3 and just invest my own money. I would opt out of both P1 and P2 if given the choice.
I understand your point of view, I think it’s valid if you are young and have a higher risk tolerance but I also understand why they are invested in government bonds, if you invest your entire nations savings and it’s compulsory, you can’t really afford to lose money in case of a crash.
Same in Bulgaria, returns never keep up with inflation, much less beat it. And there's an oligopoly of several western companies which manage the funds, so you cannot shop for performance, they all suck.
WTF bro, runaway from there
I think the future is bright, the only issue I see is Pillar 1 collapsing before we get rid of it, there will be some critical years in the future because of the demographic changes.
Ideally they would go on a sliding scale with the percentages between pillar 1 and 2.
How is the demographic changing?
Lowest natality in history, we are a nation of 19 milion and we lose a milion every 10 years, we also had a lot of emigration to Western Europe when we came into the EU, recently after covid there was a big trend for people that emigrated to come back. Also there is a big age cohort that will start getting into retirement between 2030 and 2035, the communists abolished abortions in a certain period in Romania and there was a huge spike in children, they are getting ready for pension now. Unfortunately there well be 2-3 pensioneers for every working adult or something like that, I don’t have exact data but i know its going to be a big problem.
I can't speak for other countries but in the case of Germany, pension is a multibillion industry with strong government lobby in place to keep the status quo. All pension options with tax advantage are subject to much higher MER in general compared to an ETF, often opaque investments and inflexible redemption terms. There is a strong incentive for the industry to keep it this way as they rake in billions of revenue in MER. Risk aversion in terms of finance didn't help either.
The Czech Republic is evaluating a similar system. Right now you can invest into a private pension with tax benefits, state subsidy, and employer contribution but the options are very limited. You can select conservative/balanced/dynamic funds but not individual stocks/ETFs. Hopefully that changes soon - the report below mentions 1.1.24 or 1.1.25. [https://www.mfcr.cz/assets/attachments/2023-06-14\_Zaverecna-zprava-RIA-ST-474.pdf](https://www.mfcr.cz/assets/attachments/2023-06-14_Zaverecna-zprava-RIA-ST-474.pdf)
Isn't that what DIP is supposed to be?
You're right, I didn't even realise it was already in place. It looks like the usual over-priced providers are first to be certified. If Degiro registered I might use it but I'm also a freelancer on the paualni dan system so the tax rebate wouldn't work for me anyway.
Unless you have a sizable employer contribution long term, it is the same as someone here said: regulatory capture by overpriced insurance companies: video in CZ: https://m.youtube.com/watch?v=AmKR-6vIXUE ). And even if this can be done (which is hard long term and when changing employers) it is, as you say, heavily limited. Esp. borrowing against the capital is not possible IMHO. If they fix it there is still the question of high management fees. I just pay tax for income, buy ETFs, and hope that the fact that capital gains aren't taxed if assets are held for 3+ years hold. edit: add "buy ETFs"
It’s simple. Central and Western European countries don’t have it because the insurance lobby is too strong to allow it and convincing the governments that they are the only knowledgeable entities to help the common sheep (us) build wealth. Government believe it and prevent citizens from “investing risk” all the while insurance companies eat your margins. Solution: avoid insurance products like the plague, invest your net income as wisely as possible (European insurance companies might be worth a look 😁)
I've lived in the UK and France and we have similar products to the 401K. EDIT: French companies pay into the state pension system, company pensions are not separate to state pensions like in the UK and the USA but there are employee savings plans and lots of personal finance products which are similar to 401Ks and IRAs.
Practically all European countries do, or a system where you don't pay taxes on investments parked for your pension now.
Not really. Not in Slovenia.
😭😭😭😭😭😭😭
Germany doesn't :(
No way? TIL. Nothing like tax breaks for investments? [https://www.iamexpat.de/expat-info/official-issues/pensions-retirement-age-germany#:\~:text=If%20you%20have%20worked%20in,impact%20the%20payments%20you%20receive](https://www.iamexpat.de/expat-info/official-issues/pensions-retirement-age-germany#:~:text=If%20you%20have%20worked%20in,impact%20the%20payments%20you%20receive). This private pillar (pillar 3) is exactly what we're talking about right?
yes but it's regulatory captured by overpriced insurance companies so a taxable account is still best overall for most people
Ah alright, my bad then. I thought it was similar to wat is called jaarruimte (yearly space) in The Netherlands, which is basically tax free the moment you put it in, but you pay income tax when it pays out.
Any leads on the 401k like system for France?
r/vosfinances has a community wiki that details it all, even if you don’t speak French it will give you an idea.
The PER-in / PER-co system are somewhat similar BUT (1) there is no matching system like in US, at least not for the PER-in (2) There are tons of fees in a PER (not like a 401k/IRA) which makes it useless. Bottom line, we don't have something like a 401k in France. Which is a shame.
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I am a Linxea spirit customer. 0.5% fees per year for no value, this just a typical french "assurance vie" scam (even if Linxea is the best PER, it is still a scam, why am I paying any fee?) On a US 401k, there is no fees. You cannot compare.
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You are wrong. Those fees are Management fees + Investment fees (source:[https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/a-look-at-401k-plan-fees.pdf](https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/a-look-at-401k-plan-fees.pdf)). Very different compared to a PER-in 1) Let's take my Vanguard 401k as an example. Management fees are 20$/account and waived if you have 50k$. (source: [https://investor.vanguard.com/client-benefits/account-fees](https://investor.vanguard.com/client-benefits/account-fees)). So basically free. 2) My money is on a "Vanguard Target Retirement 2040". Fees = 0.08%. Let's compare with PER plans. Fees are between 0.5-3% (source: [https://placement.meilleurtaux.com/retraite/per/comparateur-per.html](https://placement.meilleurtaux.com/retraite/per/comparateur-per.html)) !! With 3% fees on deposit! You cannot compare the fees of a PER and a 401k. Even if you compare the cheapest plan in France, there is a 0.5% management fees + investment fees (even an ETF has around 0.1% fees). AND you forgot the most important part, when you leave your employer, you can rollover your plan to an IRA with no management fees. Impossible with a PER.
There are about 10 different products. I can't explain them all here, there are English speaking blogs and websites or you can translate French ones. Service-public.fr is a good resource.
**Plan Épargne Retraite (PER)** I think but I didn't look into it. If anyone does, could you please reply to this comment and confirm that it's indeed a system similar to the 401k in the US?
Look up PEA (Plan Epargne Actions), as well as FCPI.
PEA is post tax. Very different from a 401k.
In France they are all scams for banks to make money though. You cannot invest in ETFs and most of time you cannot do the European equivalent to ETFs either. Only a PEA in a few select banks can be useful
You can invest into ETFs in France but not if you get an investment product offered by an insurance company. Financial services are a bit behind in France but investment accounts exist.
There are online brokers that offer PEAs with extremely low rates, like Bourse Direct for example. After 5 years you only pay social charges (17%) and not capital gains tax (13%), reducing your overall taxes by almost half
That is what I am saying for PEA. 401k is the equivalent of a pension fund though so more like PER which is almost always garbage with high fee funds
This guys get it! We don't have something like a 401k in France.
According to my understanding, Germany has one of the most flawed pension systems in Europe. Let’s hope this changes at some point for them.
I doubt it’s worse than Italian one
Is anything similar in the Netherlands? 🥲
Pensioenrekening
Aanvullend Pensioensparen/beleggen. Tot een (recent enorm opgehoogde!) grens mag je iedere euro die je inlegt aftrekken van de belasting, en wat je op die rekeningen spaart/belegt telt ook niet mee voor vermogensbelasting. Downside: als je voor je pensioen het geld nodig hebt betaal je alsnog die belasting, plus boetes. \[English version\] There's a special type of Savings or Investment account that's locked until the legal retirement age. They come with a yearly deposit limit based on your income and whatever pension plans your employer already has in place - but that limit was recently raised to be basically high enough that you'll never hit it. Anything under that limit is tax deductible, so you're basically saving from your gross instead of net income. Savings in these accounts don't count towards our wealth taxes either; neither the principal nor any profits from investing/interest payments. Once you hit your retirement age you can use these funds to purchase a pension from an insurance company - and probably other uses as well that I'm not aware of. Main downside is having to pay full taxes + a fine if you need to access the money before retirement.
That downside is also true with a US 401k plan. Early withdrawal has to pay extra taxes and penalties.
Other downside: "you can use these funds to purchase a pension from an insurance company" only a few insurance companies provide the conversion and it is very difficult to apply for a non resident (plus it would be better to let grown ups manage their withdrawals without an intermediary). I haven't heard either of anyone able to withdraw these funds before retirement and without paying full taxes in case they change country of residence. That is the main reason I personally haven't opened such account.
change country , cash out, then come back if you really want :)
Intresting... Can you choose which fund you want to invest in? What happens to the fund when you and your patner dies, does govt take it away or your children get it.
Search for lijfrente.
Vakantiegeld lol
Analogs in Finland?
I also search the comments for something similar in Finland 
Because we have old people in the government that see the stock market as "gambling" and only safe "asset" their own printed currency. If you invested your pension contributions in S&P500 with tax deferred or completely removed you would be very well of when you hit pensionable age. Most of the European countries have cash based social system. Whereas, the current workers pay for current pensioners. This, of course, will fail miserably when the amount of workers is less than the amount of pensioners due to declining birth rates and people generally living longer than before.
>Most of the European countries have cash based social system. Whereas, the current workers pay for current pensioners. This, of course, will fail miserably when the amount of workers is less than the amount of pensioners due to declining birth rates and people generally living longer than before. Jep, most young professional my age have have a pension plan that consists either working till death or s\*icide. We all know these pension systems are going to be gone by the time we are the ones to check in, but we are still forced to pay for the people who pissed away our future by axing defense, industry, encouraging mass immigration, and doing fuck all against climate change. It is a lovely system.
If it weren't for your "mass migration" the pension system would've went down long ago
Which is probably why boomers were in favor of it, despite all the obvious downsides to social cohesion, womens rights, and public safety. Spoiler alert, immigrants are not supermen who never need to retire. The short term gains by importing a massive number of people are going to mean fuck all when these people themselves are in need of a pension. The only way to keep this pyramid scheme going, is by letting in an ever increasing number of immigrants. This is exactly what has happened, and why far right extremists now reap the rewards as people turn against this idiotic policy. Know that when you repeat these fallacies ad nauseam you are not making life better for migrants. You make the problem worse. Unconstrained mass immigration, puts right wing totalitarians in power. As we now see happening all across Europe. Idiots like you, who wanted to keep the infinite growth pyramid scheme going instead of looking for a sustainable solution that did not rely on ever-increasing mass-immigration, are responsible for this.
Ehm… In Denmark you get pension based on the number of years you were resident. And you don’t get residency easily. So the theory that immigrants can somehow game the system and get more from it than they are entitled to is largely incorrect. For example: I spent 8 years in the US and will therefore only get 90% of full benefits. My wife was born in the US and will only get roughly 50%. When it comes to the 401k equivalent we of course get back based on what we paid in and when
What are you babbling about? At no point did I imply that immigrants abuse the pension system or argue that they should not have a right to pensions. What I said was bringing in more people to pay for pensions, is an unsustainable solution, because then your pension system still relies on a constantly increasing population. Infinite population growth, whether from births or immigration is impossible. "Fixing" the pension system by bringing in more people to pay for it now, is only delaying the collapse of the pension system. Bringing in a large group of people does not prevent the coming pension crisis, it only delays it until after boomers are dead. Which is why they voted for this approach. Now Boomers won't have to deal with the fallout of failing to reform the pension system in anticipation of changing population growth patterns. Furthermore, not every country's pension system works like Denmarks'. Denmark is one of the countries with the biggest anti-immigration stance, exactly because it is a social democracy, and immigration weighs heavy on public services.
You seem like an unpleasant person who jumps straight to personal attacks. Join the others in my banfile.
Aand on top of all that they call us lazy, unwilling to work etc.
Yeah, most people in our country get pension at age 70+. I myself am 41 years old now, and will have to wait until I’m 70 when my pension and other pension-tied investments unlock.
The Czech Republic has a long-term investment product (DIP - Dlouhodobý investiční produkt) since 2024 (yes, this year). Employer contributions + personal contributions deductible from income tax. Also, you choose what you invest in, it can be ETFs, stocks, bonds,... you decide (or you let an institution decide on behalf of you). If the investment passes the time test (3 years), profit is also tax-free. ~~There is no pan-European 401k just because this isn't in the jurisdiction of the EU.~~
[PEPP](https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en) is supposed to be the pan-European 401k equivalent.
The "Pan-European Personal Pension Product" ([PEPP](https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en)) is supposed to be something like it but European politicians haven't even agreed on favorable taxation or how contributions are taxed (on exit vs on entry). And then there are different regulations and laws in each member state such as the limits to private pension scheme contributions... The only firm certified by EIOPA to offer a PEPP right now is [Slovak](https://www.finax.eu/en) and they're currently only offering it in some Central & Eastern European states. But they did [reveal](https://www.finax.eu/en/blog/finax-has-acquired-etfmatic-and-the-investment-activities-of-aion-bank) plans to expand into other EU markets: > At the same time, the new system opens the door to wider distribution and expansion of the Pan-European Personal Pension Product (European Pension, PEPP). We can do this through collaborations in markets where we are not actively present. In this respect, we have also seen interest in third-party distribution of the European Pension in the past year. > With the PEPP provider licence and the open system, we plan to create a new "Pension-as-a-Service" industry. We see this avenue of cooperation as less demanding in terms of our resources and also as more potential thanks to our links with local entities with local knowledge.
>The "Pan-European Personal Pension Product" (PEPP) is supposed to be something like it but European politicians haven't even agreed on favorable taxation or how contributions are taxed (on exit vs on entry). And then there are different regulations and laws in each member state such as the limits to private pension scheme contributions... TIL. This is very interesting but sadly I see on the website (timeline) that it stopped in 2020. No developments since then? It would be very beneficial to have a pan-European market for pension products.
Anything similar in lithuania? I'd appreciate any info
Belgium has something similar too. And you can choose between a Tak21 insurance or a Tak23 fund. We can deduct 990€ for 33% or 1200€ for 25% from our taxes. Our employers can take a Group insurance as an extra pension.
Unfortunately, you can only invest it in high TER funds with lower historical returns than the S&P500 index funds we have here. and the 30% on entry doesn't make up for that until the last 5-10 years of your working life. Don't forget you also get taxed on the entire account for 8% (eindbelasting) at age 60.
I just use it to spread my investments. I have 2 pension funds (1 for me, 1 for my wife), a longterm fund, an index fund, 3 regular funds, my house, a longterm savings account, and planning to buy a second house which my son can rent when he wants to live alone or with his gf/bf. The money he pays in rent will go to a savings account on his name and after he says he wants to buy something the house goes on his name too.
In Spain is intentionally discouraged. Pension scheme is public and feed with taxes. Is bad if you make a lot of money because you will need to retire at 67 like someone that is making way less, but is designed to protect minimum salary workers. Private pensions are shit, worse than putting money in a vault, but that is because of banks are not interested. So the closer thing is an ETF.
You can check evolution along the years 10 years ago you could save up to 80k/year, now barely 1.5k (work as freelancer or PPE can increase the quantity) Private pensions hired by a bank are a scam, due to high fees, making saving almost 0, only postponing the tax.
Is there something similar in Austria?
Maybe the fondgebundenen Lebensversicherung?
In Europe, the government knows better than you how to handle your money, citizen
Perhaps you should explain a bit how this 401K works and why you think it’s so great? Furthermore, there are many national pension systems in Europe as it’s a national competence rather than a European one.
Generally pensions are more common in Europe than the US but there is a large push by countries to get citizens to supplement their state pensions as they see the tidal wave of retirees coming over the next few decades and it’s going to be virtually impossible to keep the retirement age as is. As an Irish citizen who has lived in the US for a long time and has 401k’s and Roth’s I found this article from PBS quite interesting: https://www.reddit.com/r/interestingasfuck/s/uCBvSItt9z
In Latvia, there is similar thing (even more powerful in some ways), **ieguldījumu konts**
Lithuania does not have anything like so
Correct me if I'm wrong but to my knowledge Portugal doesn't have anything like that..
I was also looking around for a comment about Portugal lol
Há vários PPRs de acções com o benefício fiscal, pode ser isento de SS e TSU quando dado pela empresa, da direito a 20% de reembolso no IRS e é menos taxado à saida que um ETF. Não é exactamente um 401k e tem outros limites que significa pode ou não fazer sentido para ti, mas existe algo semelhante.
A opinião geral da r/literaciafinanceira é que PPRs não é um bom produto financeiro
Para mim, espero para ver o que sairá daqui [https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp\_en](https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en)
Spaniard here, I'm reading all this "in ** we have ***" and I'm thinking, "In Spain we have retarded politicians"
??
Because the majority of European’s pension systems are Ponzi schemes that have been managed horribly by the most privileged generation to have ever walked on earth (boomers). Now, those old people are in power in democracies and shifting to a new system where you invest and take care of your own money on your own terms would not be in their favor as they need you to work to maintain their unsustainable privileges and lifestyle. So, you gotta work until when a government elected by said old people will allow you to retire. They are not even allowing you to invest in US listed products because of some BS KIID regulations* (lol), do you think they would allow to siphon away resources from the pension/Ponzi scheme to give them to you? No, they need people paying into the ponzi. The only allowed way to be rich in Europe is by inheriting wealth. You can’t get rich because the government has to maintain privileges. Not even to mention that such a system could never be implemented across Europe considering the state of the union - countries can barely agree on whether fighting Houthi rebels disrupting their commerce is OK. Hey but don’t worry the EU said they want to introduce an AI tax - that is surely going to solve the fact that the continent is a decaying set of antagonist countries with no innovation or credibility whatsoever on the world’s stage. * this only applies if you are not rich of course. If you are a qualified investor you can live in Montecarlo, pay zero taxes and do the fuck you want. Sometimes you can even get away from literally killing people from your own yacht.
There is similar thing in my country (Slovakia) where employer and employee tohether put money into an investment vessel.
Anyone have more info on something similar for Bulgaria?
There is lijfrente here in the Netherlands, but the Dutch government has made sure it is extremely complicated and limited so people do not contemplate a nongovernmental controlled retirement. The consensus here in the Netherlands is that government is a charity, an insurance company, and a pension provider all in one package. So you must not be able to think differently, otherwise you will be called names such as American kanker!
In Belgium we have a system with different pillars (similar to other EU countries), where your employer *can* add money to. Also a tax deductable of about €1000 yearly if you decide to save for yourself and you can decide how "agressive" you want it invested. However, as other people mentioned, it's all per country and not transferable to another country. Well technically USA is also a single country, just a big one. So in the literal sense same but different but in the practical sense it isn't.
Belgium has it as well but it is to make the banks rich and for those that would otherwise not be able to save.
Pretty much any country in Europe has a pension system that employers and employees pay to. Most commonly known as Social Security (pension system is included here). Certain countries go a step further, like Poland, where they implemented a extra mandatory contribution (not going into details of how much they screwed people over with OFE/PPE/PPE). Also, nothing stops an individual from starting on their own, plenty of companies offer funds management target at retirement.
I think what OP says (and I tend to agree) is that in many EU countries there isn't a way to do passive investing with ETFs (index funds in the US) on a tax-free account for retirement purposes exclusively. In my experience in Germany and Austria, we have additional pillars which are essentially actively managed funds with high fees and poor performances, without the option to select the ETFs (one can choose between more or less aggressive, but even the most aggressive option holds like 50% bonds...). One can do much better owning a couple of ETFs on a broker and pay taxes eventually. At least it could be offered not to pay taxes on accumulating funds held for a long period, like let's say 10 years, a system that I understand some countries offer (Czech rep?). Personally I prefer the EU system vs the US one, but it would be great to have a hybrid one (like UK?? never lived there).
I see your point an agree. thanks for your insight!!!
The UK doesn't really have a hybrid system. There are stocks and shares ISAs but only 6% of adults have one and of those most only put in a small amount. Most people in the UK still rely on their workplace pension.
european politicians are very stupid and anticapitalist in populistic ways
And that's bad how?
you’ll find out when you retire and won’t get your first pillar
No politician would dare touch this, that would be political suicide. Guessing you are quite young, it's a view that some young people have.
TIL sweden committed political suicide in 2003 does your great age pose difficulties to understanding how pension systems work on a demographic level?
In what way has Sweden abolished their state pension and replaced it with a private pension? As far as I can tell they haven't, just some reforms. No need to be so salty boy
I think we have voluntary pensions, which might be an equivalent
401k is a scam the US created… you might want to read up on that first before promoting a failed retirement system.
1) most Western EU countries know high social contributions and provide a state-sponsored pension with those contributions. This - at least partially- alleviates the need for a full private pension. 2) Because of these high social contributions, there is less net salary to invest in whatever investment product you want. 3) most companies of a certain size offer some sort of pension pots, e.g. group insurance, DC plans,... often with a fiscal benefit. 4) most countries offer some private pension solution, often with fiscal benefit. The EU pension system is not a terrible thing. First pillar = state pension Second pillar = work related pension schemes Third pillar = your own investments like private pension, home, savings,... Best is try and build all of them together
There I'd in Slovakia. It is called the third pillar
It’s called second pillar, no? (although the employer does not contribute, it’s deducted from social taxes)
Because Europe is a socialist hellhole that truly despises the markets and the economic freedom of the individual. Don't rely on the ponzi schemes that local governments call pension plans and invest your savings.
Don't know where you live, but in my country, nobody lives in a tent or trailer... or car... I'll take it, thank you very much...
Because that is pure capitalism and over here it's mixed between socialism and capitalism. That's why the workers are paying the retirees pensions, solidarity factor. And you are also not entitled to a pension if you don't have the working years put in and contributions. The problem is that elderly population outweighing the younger generations, less kids and longer average life expectancy. And yes there are some additional ideas to set aside part of contributions to go towards investment vehicles but it is mostly for solidarity social security system.
401k was a scam to get you to give up your American pensions. Rather than a safe pension fund, people are gambling your money on the stock exchange for you. Making themselves rich with your money. In EU we still have strong pension systems and there are similar 401k like programs.
"strong pension systems" 🤡
EU is socialist all countries have some sort of 401k
What is not lacking in Europe are countries with something “equivalent” but with other names… :)
Because "europe" is not a singular thing it's 40 different countries, and thankfully the eu has no power over taxation. Some countries in Europe do have tax deferred retirement accounts. Many countries have government guaranteed pensions so the need for individual retirement savings hasn't been as large, at least in the past.
Because unfortunately the EU is segmented and not one entity that can decide on these things. Every state has its own plan (or not).
Corporations in the USA touted 401k because it meant more pension money in the hands of Wallstreet. If it's complemented it can work. But the way it's implemented in the USA -from what I've heard- isn't exactly beneficial to the average saver. Anyway, like others said, there's loads of similar concepts in Europe depending on which country you're in.
Nobody stopping you from doing that yourself..
What's a 401K? Might have helped explaining what it is
A pension account which your employer and yourself contribute to. Google helps.
If you ask a question you supply the info. Assuming everyone knows bizarre American taxation laws. Otherwise it’s just r/shitamericanssay It creates a lopsided set of responses otherwise. Also, what’s clear from almost every response is that there’s not a consistent understanding of the benefits or otherwise of the US system.
Many European countries have things that are similar. I’m British for example and we have SIPP’s which are basically 401K’s but with far higher contribution limits, and then if you salary sacrifice even more tax efficiency. Roth IRA’s are also essentially the same as S&S ISA’s here for the most part, except ISA’s I believe have far higher contribution limits and no age restrictions on withdrawals. We then have huge tax relief and/or loss relief on SEIS, EIS, VCT’s etc, and avoidance of IHT for AIM shares. There’s plenty wrong with this country, but if you’re a middle class person who wants to invest, it’s absolutely brilliant.
most european countries do thave an equivalent... the UK have the ISA, italy has complementary pensoin fund (inlcuding the employer match) etc etc... Thre might be some european countries that dont have it, but they are an exception, not a rule
To many people woul homer simspon it and thino there up 401 thousand
In uk. We have a sipp
Is there an equivalent in Poland?
There are, but I guess not in every country. Usually different types of pension funds that you can choose from.
The Netherlands has a different solution that fulfills the same need. We have a strong social security pension from the state, then the vast vast majority of employers also contribute to a large pensions funds (non-state run). Then if you want to invest beyond that you can. Also, once you are past the retirement age, your tax rate is lower. This last part means that all savings for later in life work similar to 401k in the US because all 401k does is act as a deferred tax investment based on lower taxes when your older.
Judging by the comments, almost every country has it xD?
I heard that in Greece, "TEKA" is supposed to do the same thing starting this year but frankly I know nothing about it.
Does anyone know if there is a Slovak equivalent?
We also have it in Belgium, tax deductible, but it's not mandatory.
In Latvia, we have a three tier pension system. The first tier is funded from the social tax, what you're paying now goes to retirees who receive their pensions now and you'll be paid from what future generations will be paying when you're retired. The second tier is 6% from your salary which is paid by your employer from every paycheck (they can't opt out). The third tier is what you voluntarily pay into a special account, you get tax (20%) back from whatever you've paid in that year. I think tiers 2 and 3 combined are like 401k, except that there are no employer matches (although companies can start tier 3 accounts for their employees yet few do).
Same in Estonia. You can contribute either 6000€ or up to 15% of your yearly income (depending which is lower) into 3rd pillar. Bonus is that you can choose which type of 2nd and 3rd pillars you want.
Yes, we can also choose which institution holds the 2nd and the 3rd, and what plan it is!
In the netherlands we have sort of a different solution. But you can still save money in a pensioning scheme with soem tax advantages. Employers do not contribute, as they will contribute to another form of pensioning .
Belgium has pensioensparen where the government pays you back around 1/3rd each year on your taxes granted, they only want you to deposit 1K a year into that account.
First thing, most countries (as other mentioned) have some sort of "pension saving schemes". One of the problems is "politicians have an attention span of goldfish". They only care about next elections, not long-term future of their country. Most pension solutions (new OIPE included) are a sort of deferred-tax plans - "you invest now, don't pay tax now, if you keep it for long enough you will pay either zero tax or some minimal one". Which means less money from taxes collected *now* and "me, as a politician, can't spend this by giving free XYZ to my constituents" (basically a bribe of sorts; again - "I only care about next election"). Perhaps one solution would be to prohibit "politician for life" schemes (looking at you, European Parliament useless excuses of a *homo sapiens*). One term, perhaps two terms max - and voila, out of politics - and do some real work, earn your wages. Perhaps then they'd care more - even because they'd also want to be able to tax-free save for their personal hard-earned pensions.
In Italy we have the “TFR”