In 2024, the net asset value of the funds reached Lek 12.87 billion or almost Euro 131 million, an increase of 17% compared to the previous year. The growth of assets was at levels similar to 2023.

The figures reported by the Albanian Financial Supervision Authority (AFSA) since 2024 also include indicators of closed pension funds, set up by employers for the employees of their companies.

Excluding closed-end funds, the net assets of open-end pension funds amount to around Lek 8.1 billion or Euro 82.5 million.

The total number of members in private pension funds reached 44 in 2024, up 9.26% year-on-year. Market growth improved significantly from 15.7% to 4.6%.

During 2024, more than 6100 members were added to private pension funds. The improvement in market growth may also be related to the entry into force of the new law "On Private Pension Funds", which has brought increased fiscal incentives for contributions to private pension funds.

Under the new law, the maximum monthly tax exemption limit has been increased to the level of the approved minimum wage, which has currently reached Lek 40 thousand per month.

Since the tax exemption is linked to the minimum wage level, it is expected that this incentive will increase even more in the coming years.

With the current level of the minimum wage, the amount of tax-exempt contributions would today reach Lek 480 per year, or 140% more compared to the current threshold of Lek 200.

Even private pension contributions paid by the employer in favor of the employee will be exempt from tax to the same extent.

The law also provides that pensions are not taxed on the part of the contributions, but only for the return on the investment, provided that the withdrawal is made with monthly payments spread over at least two years and not immediately, after fulfilling the legal conditions for private pension benefits.

In a decade, the number of pension fund members has increased by more than five times, but this growth has come from a very low base, and the rate of employee participation in these funds remains quite modest.

The number of individuals contributing to a private pension constitutes about 3.5% of the total number of employees in the country.

Pension funds represent a savings alternative to have sufficient income in retirement. Their returns are generally lower and more stable compared to mutual funds, also because of the different way of calculating returns.

Investment funds are liquid and are required to value assets at fair market value daily.

As for pension funds, the same logic is not followed, because in theory, funds from these pensions cannot be withdrawn until the legal conditions are met (at least five years before the legal retirement age).

Pension funds are allowed to account for the financial instruments in which their assets are invested as held-to-maturity, at amortized cost, so they are not greatly affected by short-term fluctuations in interest rates.

For this reason, the returns of the pension funds mainly reflect the performance of the financial instruments where their contributions are invested, the bonds of the Albanian government, and the differences in the rates of return between the different funds are smaller.