For some portfolios, the market recovery alone could have meant hundreds or even thousands of euros in higher value, and by withdrawing, one also foregoes state incentives and the long-term effect of compound interest, says Loreta Načajienė, head of Luminor Investment Management.
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“The decision to withdraw from the second pillar pension scheme should not be made solely due to short-term emotion or uncertainty. The first half of this year clearly showed that markets can change quickly, so it is important to assess not only how much money can be withdrawn today, but also what future value is being foregone,” says L. Načajienė.
According to her, some clients stopped accumulating in January and later submitted requests to withdraw from the II pillar. In such a case, the amount paid out depends on the moment of calculating the fund value, market changes, and the portion of funds returned to “Sodra”. If the decision is made before markets have recovered, a person may lock in a lower portfolio value.
Market rise increased the value of accumulated funds
The second quarter of 2026 was very favorable for global stock markets: the global stock index rose by about 15 percent, making it the best quarter in the last five years. The values of Luminor pension funds also grew during this period: conservative fund values increased by 4.5–6.7 percent, while funds for younger participants, investing more in stocks, rose by 11.4–17.6 percent.
“Pension accumulation is a long-term process, so fluctuations over a few months should not be the sole criterion for a decision. This half-year also reminded us of another important rule – by withdrawing at an unfavorable moment, one might miss out on a subsequent market recovery,” states L. Načajienė.
For example, if at the end of the first quarter of 2026, a person’s II pillar portfolio amounted to 6 thousand euros, by withdrawing, they could have received about 4 thousand euros, after returning a portion of the funds to “Sodra”. If such a participant had continued to accumulate, due to investment returns and new contributions, the accumulated value at the end of the second quarter could have reached about 7.2 thousand euros, and the amount that could be withdrawn – about 5.1 thousand euros. In such a case, the difference could have been about 1.1 thousand euros.
Even a few months can lead to a difference of thousands of euros
The difference becomes even more pronounced when the portfolio is larger. If the contract value was about 10 thousand euros, the difference could have been about 1.9 thousand euros: the amount withdrawn in the first quarter would have been about 6.7 thousand euros, and in the second – about 8.5 thousand euros. For even larger portfolios, the impact would have been more significant: in the case of a 50 thousand euro contract, the amount withdrawn could have increased from approximately 33.3 thousand to 42.7 thousand euros, so the difference would be about 9.4 thousand euros.
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“This is not an attempt to say that withdrawal is a bad decision in all cases. Each person’s situation is different – it depends on age, income, accumulated amount, financial obligations, and goals. However, before making a decision, it is worth calculating very specifically: how much you receive from the state, how much the fund can earn, and what consistent accumulation creates over a long period,” says L. Načajienė.
The average II pillar portfolio currently amounts to about 8–9 thousand euros. If a person withdrew at the beginning of the year and recovered about 5 thousand euros, at a more favorable time, their payout could have been higher, for example, about 6.5 thousand euros. This difference is determined not only by market growth but also by when the portfolio value is calculated and what portion of the funds is returned to “Sodra”.
Not only return, but also state incentive is important
By withdrawing from the II pillar, one foregoes not only potential investment returns. By continuing to accumulate, state incentives are also added to the resident’s contributions, which over time also become part of the invested amount. The longer the accumulation period, the more important the compound interest effect becomes – when returns are earned not only from contributions but also from previously earned returns.
“The impact of compound interest often seems abstract until you see it in numbers. However, in pension accumulation, time is one of the most important factors. Even relatively small regular contributions and an average long-term return over several decades can significantly increase the accumulated amount,” notes L. Načajienė.
She reminds that before making a decision, one should evaluate not only the current need to have money in the account but also what portion of a future pension these funds could constitute.
“If a person decides to withdraw, they should have a plan for what they will do with these funds next – where they will keep them, how they will protect them from inflation, whether they will invest them, and what risk they will take. Simply withdrawing money is not yet a financial plan. Therefore, the most rational path is not to rush, to calculate, and to make a decision based on long-term goals, not emotion,” says L. Načajienė.
