Current pension value

What it means

The current pension value is an amount in euros representing the value of one personal wage point. It is one of the three inputs the Social Insurance Agency uses to calculate a pension.

A monthly old-age pension equals the average personal wage point times the number of years in the pension insurance period times the current pension value. The first two reflect the individual's career, the third the general wage level in the economy.

The value changes every January in line with growth in the Slovak average wage. The value in force on the day entitlement arises is what counts; after that, pensions in payment rise through indexation.

How it works in practice

For entrepreneurs and employees the current pension value helps estimate a future pension. Together with contribution levels it shows whether a sole trader's minimum contributions will provide enough income in old age.

When deciding to retire around the turn of the year, the fact that a new, usually higher value applies from January may matter. The timing of the application is worth discussing with the Social Insurance Agency.

The value is also used for disability and survivors' pensions. For foreign workers who spent part of their career in Slovakia, the Slovak part of the pension is calculated with it too.

What to watch out for

The current pension value is sometimes confused with indexation. The value affects how a new pension is calculated, while indexation raises pensions already in payment under different rules.

Estimates of a future pension are only indicative, as the law and its parameters change. It is sensible to plan with a margin and use the third pillar or other savings as well.