The Redefined Legal Framework for Private Pension Funds in Albania

A significant development took place on November 6, 2023, with the introduction of a new legislation, Law No. 76, receiving parliamentary approval in Albania on September 21 of the same year.

The existing law, governing private pension funds since 2009, has struggled to keep pace with the dynamic demands of an ever-evolving market.

The new law represents a significant and transformative shift, designed to encourage both individuals and employers to view private pension funds as a preferred option to provide an additional pension supplementing the public one. The new law enables a further alignment with the European legislation

This law is driven by the dual objectives of safeguarding the interests of private pension fund members and fostering increased participation in the private pension scheme.

The recent amendments to the pension law have ushered in significant changes aimed at enhancing the overall landscape of pension provisions. One of the key modifications is a substantial increase in the maximum annual deductible limit for personal income tax. This limit, which varied between ALL 200,000-250,000 in 2009 depending on age (over or under 50 years old), has now been elevated to a minimum annual salary of ALL 480,000.

In a parallel move, employers contributing to the private pension plans of their employees will also benefit from this increased deductible limit. This contribution is now officially recognized as an expense eligible for income tax deductions, fostering a more favorable environment for employers to actively engage in supporting the pension initiatives of their workforce.

Furthermore, the new pension law introduces novel types of pension funds, injecting dynamism into the system to encourage broader participation.

For the first time, the law acknowledges the concept of a pension fund with closed participation, providing an alternative avenue for individuals seeking a more exclusive and tailored approach to their pension planning.

Simultaneously, the existing open participation fund, which imposes no membership restrictions and is established by the administrative company, remains a viable option.

In a bid to streamline and optimize the pension administration process, the amendments also entail a reduction in the maximum administration fee. This fee, previously set at 3% per year on the net value of assets, has now been lowered to 2.5%, aiming to strike a balance between the sustainability of the pension system and the interests of its participants. Additionally, the revision condenses the payment terms for pension benefits from 30 days to a more expedited 15 days, providing beneficiaries with quicker access to their entitled funds.

These amendments collectively represent a comprehensive effort to modernize and fortify the pension system, fostering inclusivity, efficiency, and tax equity. The changes not only cater to the evolving needs of individuals but also promote a symbiotic relationship between employers, employees, and pension fund administrators.

  • In conclusion, aligned with European legislation, the new law encourages a notable shift, positioning private pension funds as a preferred option for individuals and employers alike. The amendments introduce crucial changes, including enhanced tax benefits, novel pension fund types, reduced administration fees, and expedited payment terms. This comprehensive approach aims to create a more inclusive, resilient, and forward-looking private pension framework in Albania.

Should you need any clarifications, contact Eurofast office in Albania at

Ingrid Kodra Eurofast

Ingrid Kodra
Global Mobility Consultant
Eurofast Tirana