Charges for the OP Saving-for-retirement account will go down and the related pricing structure will change as of 1 October. This change will apply not only to new agreements but also the existing ones.
According to OP-Pohjola Group's new price recommendation, customers under the OP Saving-for-retirement scheme will pay only fees equalling those charged to customers investing directly in mutual funds, deposits, equities and other securities. OP Saving-for-retirement came onto the market on 1 April 2010 and at first its pricing was based on an annual management fee which also covered securities custody fee, for example, accounting for 0.4% of the capital invested.
Based on the new pricing model, the long-term savings account is no longer subject to a separate management fee. From 1 October, customers will pay standard fund subscription, switch and redemption fees. If customers hold shares or other securities, they will pay a monthly custody fee of 1.5 euros. Customers entering the OP Saving-for-retirement scheme this year will be entitled to a 12-month custody service free of charge.
Following the price change, OP Saving-for-retirement will be more inexpensive for all customers regardless of the amount of capital they invest, their investment style and the level of their investment activity.
- OP-Pohjola Group member banks are owned by their customers and we want to ensure that we will be able to provide them with absolutely competitive services for all their needs, explains Senior Vice President Mika Kivimäki.
- According to the OP Investor Barometer published in early summer, Finns think it is necessary to save money for retirement on a voluntary basis but they do not regard it as being of interest at the present time. We want to encourage our customers to save for retirement on a long-term basis and can offer good options for that, continues Kivimäki.
OP bonus customers can use their OP bonuses earned through banking transactions to pay fund subscription fees and custody fees. Moreover, investments made through OP Saving-for-retirement in accounts and mutual funds will generate bonuses as usual.
The terms and conditions of OP Personal Pension Insurance will not change in this connection and it will remain within Group member banks' product range alongside with the OP Saving-for-retirement scheme. Customers can choose one of them, depending on their needs. Moreover, it is possible to transfer savings between OP Personal Pension Insurance and OP Saving-for-retirement. In the first few months after the launch of the OP Saving-for-retirement service, OP-Pohjola Group's market share of new bound long-term savings accounts has stood at around 25%. The Group's market share of all new saving-for-retirement agreements, including voluntary personal pension insurance, stands at roughly 35%.
As provided by the Act on bound long-term savings in force since 1 January 2010, bound long-term savings schemes are also covered by the same, familiar tax treatment as applied to voluntary personal pension insurance. The OP Saving-for-retirement service is a tax-subsidised saving-for-retirement product in accordance with the abovementioned Act. Savers can deposit funds into a specific long-term savings account in such a way that the deposited amounts are tax-deductible with certain restrictions based on the law. Funds can be reinvested through this account in equities, mutual funds, deposits and bonds. During the saving period, customers may change from investment assets to another without tax consequences. In addition, interest payable on deposits and bonds, and dividends are exempt from tax during the saving period. Pension savers may begin to withdraw the funds they have saved as soon as they reach their full retirement age under Finnish employees pension legislation, which is currently 63 years. Pensions paid are subject to capital gains tax. Saving-for-retirement will have no effect on the amount or accrual of statutory employee pension.
FOR MORE INFORMATION, PLEASE CONTACT:
Mika Kivimäki, Senior Vice President, OP-Pohjola Group Central Cooperative, tel. +358 (0)10 25 22735