When we think about caring for our loved ones, we most often think about our children’s education, helping our parents or providing financial support to our family — all of these are forms of care in the present. But what if we also took care of their future in advance and built up long-term savings for them?
This is exactly what non-state pension funds are designed for. A pension contract can be arranged not only for yourself, but also for a child, spouse, parent or other relative. At the same time, the savings remain personal and can be topped up regularly over many years.
If you are already saving through the “OTP Pension” NPF, you understand how the system works. The next logical step may be to build the same kind of long-term savings for the people you care about most. After all, starting to save for a loved one today is much easier than dealing with financial needs many years from now.
Under the Law of Ukraine “On Non-State Pension Provision”, a pension contract with an NPF can be concluded:
- for yourself;
- for your spouse;
- for a child;
- for parents or other relatives.
It is important here to understand the difference between a contributor and a participant of the fund.
A contributor is a person who enters into a pension contract and makes contributions.
A participant is a person for whose benefit the savings are accumulated.
In other words, the contributor and the participant can be different people. The contributor determines the amount and frequency of contributions and can change the amount or make contributions whenever convenient. At the same time, the participant can also make contributions to their own pension account under their individual agreement.
When is it worth opening a pension contract for a loved one?
A pension contract can be arranged for virtually any family member. Depending on the circumstances, however, it can serve different financial purposes.
Pension contract for a spouse
Not both members of a family always have the opportunity to save regularly on their own. One person may be on parental leave, temporarily out of work or changing careers.
In such cases, a pension contract allows one spouse to build up long-term savings for the benefit of the other. Even a regular contribution of several hundred hryvnias per month over many years can build significant capital.
Pension contract for parents
Most of us help our parents when a need arises. But support can also be arranged in advance.
A pension contract makes it possible to gradually build up additional savings for parents, which in the future may become an important source of financial support and additional payments.
Pension contract for a child: when time works in favor of savings
Time is one of the most important factors in long-term saving. The earlier investing begins, the longer the money can work and potentially generate investment income.
That is why opening a pension contract for a child is often considered an investment with significant potential to grow financial capital. As the child grows, the funds can be invested and generate investment income, while that income can increase the overall amount of savings.
Here is what this can look like in practice.
For example, if immediately after a child’s birth you make a one-time contribution of UAH 20,000 to an “OTP Pension” account and simply leave the funds invested, even without making any additional contributions, the accumulated amount could grow to UAH 14 million by the age of 50. This assumes a 14% return (the average return over the 17 years of operation of the “OTP Pension” fund).
And if you also make regular additional contributions, for example UAH 500, the result could be even more significant. You can calculate the result using the Calculator.
Such savings can become a reliable financial reserve for a child in the future. By the time they reach retirement age, they may already have their own accumulated capital built through many years of investing. Moreover, once they reach working age, the now-adult child can continue making contributions independently.
How to open a pension contract
A pension contract can be opened entirely online without visiting an office. All you need to do is complete identification through the Diia app, sign the documents electronically and make the first contribution.
If you decide to open a contract for a loved one — a spouse, parent or other relative — you become the contributor, while the person for whom the contract is opened becomes the participant of the fund. The pension savings are accumulated for their benefit, while you can make contributions in an amount and at a frequency that is convenient for you.
To arrange a contract for a minor child, you will need the child’s birth certificate available in the Diia app. It is required to verify the child’s details when completing the contract online.
One of the parents must be the contributor, opening the pension contract for the benefit of the child and making contributions to the child’s pension account.
Need help opening a pension contract? Submit a request — we will answer your questions and help you complete all the steps: Consultation
Tax credit: a significant benefit for the family budget
One of the key advantages of a non-state pension fund is the opportunity to claim a tax credit.
If you are officially employed and pay personal income tax, the state allows you to recover part of the tax already paid on pension contributions. This applies both to your own pension contract and to contracts concluded for the benefit of first-degree family members — children, parents or a spouse.
The amount of expenses that can be taken into account when calculating the tax credit is limited by the Tax Code of Ukraine: for yourself — within the established amount, and for a first-degree family member — within 50% of that amount.
To claim the tax credit, after the end of the calendar year, you must submit a property and income tax return to the tax authorities, along with documents confirming the payment of pension contributions. After the documents have been reviewed, the reimbursed amount is transferred to the taxpayer’s bank account.
Thus, part of the amount paid can be refunded from the state budget, making long-term saving even more beneficial.
Care that works for years
Caring for loved ones is not only about supporting them today, but also about helping them tomorrow. We cannot always predict what life will look like in 10, 20 or 30 years. But we can take a step today that can help our loved ones feel more financially confident about the future.
A pension contract is an opportunity to gradually build up savings both for yourself and for your loved ones. For some, this may be their first contract with the “OTP Pension” NPF; for others, an additional contract with the “FreeFlight” NPF may be a way to complement their long-term savings strategy. The key is to take the first step today, because time is one of the most important allies of long-term investing.
Frequently asked questions
Can I open a pension contract for a child?
Yes. Parents can open a pension contract for the benefit of their child and make contributions to the child’s individual pension account. To arrange a contract for the benefit of a minor child, the child’s identification details are required, including their taxpayer identification number (RNOKPP). Online registration is also possible through the Diia app if the child’s birth certificate is available in the app.
Can I open pension contracts for several family members?
Yes. One contributor can enter into pension contracts for the benefit of several close family members — for example, a child, spouse or parents. In this case, separate individual pension savings are accumulated for each participant.
Can I make contributions to an NPF on behalf of another person?
Yes. A contributor can make pension contributions on behalf of another person who is a participant in the fund. For example, one spouse can make contributions for the other, parents can contribute for their child, and adult children can build up savings for their parents. At the same time, the participant can also make contributions to their own pension account independently.
Can a participant make contributions to their own pension account?
Yes. If a pension contract has been opened for the benefit of another person, the contributor can make contributions on their behalf, while the fund participant can also make contributions to their own individual pension account. This makes it possible to build up savings jointly and increase them over time as financial circumstances allow.
Do I need to make contributions to an NPF every month?
No. The frequency of contributions depends on the terms of the pension contract and the chosen savings strategy. You can set up regular contributions or top up the pension account whenever it is convenient. What matters is that even relatively small contributions made over a long period can gradually build significant capital.
What happens if I temporarily stop making contributions to an NPF?
A temporary break in contributions does not mean that your accumulated savings disappear. The funds already held in the individual pension account continue to be recorded and invested in accordance with the fund’s investment strategy. Contributions can be resumed later when circumstances allow.
Can I change the amount of my pension contributions?
Yes. The contribution amount can be adjusted to suit your financial circumstances. Contributions can be increased, reduced or made more or less frequently, subject to the terms of the pension contract. This makes long-term saving more flexible and adaptable to different life situations.
Can I claim a tax credit for contributions made on behalf of a relative?
Yes. A tax credit may be claimed for contributions made for your own benefit, as well as for the benefit of first-degree family members — children, parents or a spouse. Different limits apply:
- for yourself — within the amount established by the Tax Code of Ukraine;
- for a first-degree family member — within 50% of that amount.
To claim the tax credit, you must submit a tax return and supporting documents to the tax authorities.
Prepared by OTP Capital experts
