NEWS - 20. April 2017 17:05
Although the pension awareness and confidence of the Estonian people towards the future remained generally higher when compared to their Baltic neighbours, the activity of Latvian and Lithuanian people in saving for pension has been thriftier over the last couple of years. One of the key factors for growth is the employers of our southern neighbours, who together with the employees contribute to their pension pillar, the SEB Retirement Readiness* survey revealed.
The SEB Retirement Readiness survey revealed that only 15% of Estonian people are accumulating additionally for pension, regularly saving EUR 90 per month. The number of those saving for pension is still higher in Latvia and Lithuania, being 21% and 22%, respectively.
“The activity of people in the three Baltic states in preparing for retirement is showing an increasing trend each year. However, the growth is minimal. Over the last year, the activity of Latvian and Lithuanian people in growing their pension assets has increased significantly. Local employers most definitely play a part in it, by regularly contributing together with the employees into their pension pillar. According to the SEB survey, 13% of Latvian and 10% of Lithuanian employers make regular additional contributions to their pension pillar. Unlike our southern neighbours and, also Scandinavia, the employer’s pension solution has not gained momentum in Estonia. According to the last statistics from the Ministry of Finance, only 2000 employees in Estonia are getting investments into the 3rd pension pillar also from their employing enterprise**,” said Indrek Holst, CEO at SEB Elu- ja Pensionikindlustus, explaining the differences in pension savings between the states.
Awareness of alternative income for retirement age is still low in all Baltic countries.
A total of 53% of Estonian residents plan to secure their retirement with the help of alternative income, with the number being 45% in Latvia, and 39% in Lithuania. In all three countries first place is held by working during retirement, followed by the sale or rental of real estate. In Estonia, over 80% of respondents hope to spend their retirement working and 73% plan to cope with the money received from the sale or rental of real estate. At the same time, only 33% of pensioners claimed to still be working and 35% have sold their housing.
“People are feeling the need to secure their finances for retirement, be it saving solutions or other alternatives. The survey indicates that the hope of additionally financing one’s retirement with the help of real estate has encountered an upsurge in Estonia this year. However, when mapping the alternative sources of income of current pensioners, we can see that a lot of alternatives might not be realised for a variety of reasons,” Holst says.
The social experiment “Life in the Shoes of a Pensioner” is helping to raise pension awareness
To direct the public’s attention to the problems related to income during retirement, SEB Elu- ja Pensionikindlustus initiated an experiment “Life in the Shoes of a Pensioner”. Within the framework of the experiment, representatives from three generations are trying to live off of an Estonian pension, which is slightly above the average, for one month. You can read about the challenges of early retirement, coping with life, budget plans, but also about the alternatives of additional income from the video blogs of participants in the experiment at: http://www.seb.ee/pensionivalmidus.
*Results of SEB Retirement Readiness Index 2017 http://www.seb.ee/sites/default/files/web/files/pensionivalmidus_2017.pdf
**Statistics of the Estonian Ministry of Finance on the pension, 2nd and 3rd pension pillars 2016 http://www.pensionikeskus.ee/files/dokumendid/kogumispensioni_statistika...
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