PrintSecond pension pillar contributions temporarily frozen
On 14 May 2009 the Riigikogu adopted the Funded Pensions Act (hereinafter the FPA) and the Social Tax Act Amendment Act, pursuant to which temporary changes are made in the second pension pillar contributions from 2009 to 2017. Contributions to mandatory pension funds were suspended with the Act from 1 June 2009 to 31 December 2010.
People have the option to continue making contributions to the second pension pillar from the start of 2010 on the basis of an application. A special rule was applied to people born from 1942 to 1954, which granted them the right to apply for continuation of contributions at the usual rate (2% + 4%) in 2010 and 2011.
Contributions to the second pension pillar are made on the basis of a special procedure in 2011, which means that the state pays 2% and people pay 1%. The situation where people pay 2% and the state adds 4% will be restored in 2012.
The persons who voluntarily continued making 2% contributions in 2010 and 2011 without the state adding 4% will pay 2% to their mandatory funded pensions from 2014 to 2017 to which the state will automatically add 6%. The persons who have joined the pillar also have the option of increasing their share of the contribution from 2% to 3% from 2014 to 2017.
The persons who did not continue making contributions in 2010 can also submit applications in 2013 for making 3% contributions from 2014 to 2017 to which the state will add 6% from social tax. However, the deadline for submission of applications and the implementation of bigger contributions will be postponed for a year if nominal economic growth is less than 5%. The temporary increase of the contribution rate will be postponed for a year if the economic growth achieved in 2012 and 2013 is not at least 5%, and the temporary increase of the contribution rate will not be implemented any later than from 2017.
Examples of contributions
1. A unit-holder does not wish to submit a voluntary continuation application.
| 2009 2nd half | 2010 | 2011 | 2012-… |
| 0 + 0 | 0 + 0 | 1 + 2 | 2 + 4 |
2. A unit-holder submits an application for continuing contributions from 1 January 2010.
| 2009 2nd half | 2010 | 2011 | 2012-2013 | 2014- 2017* | 2018-… |
| 0 + 0 | 2 + 0 | 2 + 2 | 2 + 4 | 2 + 6 | 2 + 4 |
* The state has the right to postpone compensation if nominal economic growth is less than 5%.
3. A unit-holder does not submit an application for voluntary continuation of contributions, but wants to earn back the part they lost from 2014 to 2017.
| 2009 2nd half | 2010 | 2011 | 2012-2013 | 2014- 2017* | 2018-… |
| 0 + 0 | 0 + 0 | 1 + 2 | 2 + 4 | 3 + 6 | 2 + 4 |
* The state has the right to postpone compensation if nominal economic growth is less than 5%.
4. A unit-holder, who was born from 1942 to 1954, submits an application for continuing contributions from 1 January 2010.
| 2009 2nd half | 2010-... |
| 0 + 0 | 2 + 4 |
Contact
Prior to the conclusion of each financial service agreement, we advise you to examine thoroughly the service conditions and if necessary, consult a bank officer.
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