As of today, May 27, Luminor is introducing a sustainable 3rd pillar index plan in Latvia – the Luminor Index Pension Plan Sustainable Future, which will allow people to save for old age while taking care of the environment, sustainability and public welfare. The pension plan will invest in index funds, which in turn will invest in global companies that are leaders in their sectors in terms of environmental, social and corporate governance (ESG) criteria, excluding fossil fuel companies from the investment spectrum.
Luminor Index Retirement Plan A sustainable future is the first tier 3 pension index plan in Latvia, which promotes compliance with the ESG criteria. Up to 100% of the fund’s assets will be invested in equity index funds. This will also be the first pension fund managed by Luminor.
“With the growing interest of the population both in ensuring the well-being of old age and in how to live more environmentally friendly, we have taken the next step and offer our customers the opportunity to save for the future sustainably. Luminor Index Retirement Plan A sustainable future will invest in companies that are leaders in their industries in terms of environmental, social responsibility and governance criteria. Fossil energy companies are also completely excluded from the investment spectrum. Unlike other funds available on the market, the Luminor index plan stands out by combining a liability management strategy with the promotion of sustainability criteria, making it suitable for Latvians who want to support socially responsible investments, ”points out Atis Krūmiņš, Head of Luminor Investment Department.
Luminor Index Retirement Plan A sustainable future in addition to the beneficiaries of this fossil energy, no investment will be made or reduced to a minimum in other non-ethical sectors, such as armaments, tobacco, alcohol, the nuclear industry, gambling, the production of genetically modified products and others. In turn, the management of a passive fund will provide clients with diversity in the choice of savings, as this plan will closely monitor the results of the stock market, and will not be based on the manager’s opinion on what is happening or expected in the financial markets.
Pension plan for younger residents
Luminor Index Retirement Plan A sustainable future is suitable younger and middle-aged Latvian residents who have at least 15 years left until retirement age. By investing up to 100% of the fund’s assets in the stock markets, its participants take on a higher risk, which means that they are likely to experience significant fluctuations in the value of their investments during the accumulation period. However, it is with such a strategy that it is possible to achieve higher returns in the long run compared to a more prudent or conservative investment strategy.
Savings for the future must begin today
In order to feel comfortable and not have to radically change your daily habits and living standards in old age, after the end of active work, a person’s income should preferably reach at least 70-80% of the current monthly income. Taking into account that the average time spent by Latvians in retirement is about 20 years, people need to start taking care of their future in time.
“According to current calculations, savings in pension levels 1 and 2 will probably be able to provide only about 40% of existing income. Therefore, for better old age, we recommend residents to be actively involved in savings. One of the most convenient ways is savings in pension level 3 – regular It is important to remember that when investing in pension funds, always pay attention to the investment risk – low, medium or high.If necessary, we recommend consulting our specialists, because it is important to choose the optimal level of risk based on each age and other circumstances, as an overly risky or conservative strategy will not be suitable for achieving an optimal result, ”adds Atis Krūmiņš.