From the 15th of May to 15th of September this year, Estonian banks are accepting applications for raising the payment rate for the mandatory funded pension payments for the following four years. Raising the payment rate does not concern people who were born between the years 1942-1954 and who submitted an application in the fall of 2009 to continue the payments.

The 2nd pillar payments were frozen in 2009-2010
The increase of payments provided by the government for the period of 2014-2017 was written into the amendment of the funded pension law in 2009, when the government stopped their downpayments from June 2009 until the end of 2010 and decreased payments in 2011.

The payment to the mandatory funded pension consists of two components: 2% is what the person pays themself from their income where social tax has been applied (salary) and 4% will be paid for them on account of the social tax paid. The increase of the payment rate involves both of these components (2% and 4%).

Submitting applications to increase the mandatory funded pension payment
A person who submitted an application to extend these payments in the fall of 2009, will have their payment rate automatically increased on the expense of the social tax from 4% to 6%. Additionally they will have the opportunity to increase their contribution from 2% to 3%.

A person who did not submit the application to extend the payments in the fall of 2009, now has the possibility to submit an application to raise the compulsory funded pension payments from the current 2% to 3%. With this application, the funded pension payment that is paid on behalf of them as the social tax will automatically be increased as well from 4% to 6%.

Submitting the application is voluntary. Raising the payment rates helps to even out the break in payment collection in 2009-2010 and the lowered payment rates that were applied in 2011.

You can check your application information from 2009 at the pension centre’s webpage (www.pensionikeskus.ee) or in the bank.

The increased payments for the 2nd pillar will be applied for 2014-2017
The higher payment rates (3% and 6%) will be valid for 4 years: 2014-2017. For increasing the rates it is possible to submit applications to the bank that is administering your funded pension or through the pension centre’s website from the 15th of May 2013 until the 15th of September 2013. The higher rates will be implemented on the 1st of January 2014.

Source: Ministry of Finance