The money saved in the third pension pillar is inheritable during the period of saving as well as the period of payouts.
The third pension pillar can be inherited either:
- on the basis of the general Law of Succession Act (third pension pillar funds), or
- by paying out the money to the beneficiary (life insurance contract).
Payments to successors are subject to income tax.
Inheriting third pension pillar funds
The Law of Succession Act, which entered into force on 1 January 2009, stipulates that all of the rights and obligations that form an estate belong to all successors jointly.
Pursuant to the Family Act that entered into force on 1 July 2010, the parent or guardian who represents a successor who is a minor or an adult whose active legal capacity is restricted requires the prior consent of a court in order to enter into a contract for division of an estate. This means that if there is at least one person among the successors who is a minor or an adult whose active legal capacity is restricted and the successors submit one or several succession certificates (instead of a notarised contraction for division of an estate), the bank may fulfil the orders of the successors in respect of the estate only if the successors submit the consent of a court to the performance of the relevant transaction (division of the estate). The consent of a court is not required if the minor or the adult with restricted active legal capacity is the only successor.
Documents that must be submitted to the bank
The following documents must be submitted to the bank if the successor is a private person:
- a notarised succession certificate or contract for division of an estate. The deceased’s spouse must submit a certificate of the right of ownership;
- the parent or guardian who performs a transaction on behalf of a successor who is a minor or an adult with restricted active legal capacity must submit a notarised contract for division of an estate or a succession certificate with a court’s consent to the division of the state, unless the minor or the adult with restricted active legal capacity is the sole successor, and
- an identify document accepted by the bank.
In the event of inheritance of voluntary funded pension (third pillar) fund units
- a successor who is a private individual has the right to demand transfer of all or some of the inherited fund units to their securities account or their redemption by the fund; and
- a successor who is a legal entity has the right to demand redemption of the inherited fund units within one year of the client's death. The money will remain in the pension fund and the units will be cancelled if the legal entity does not demand redemption of the units during this time. The units are cancelled and the money remains in the pension fund if the successor according to the succession certificate is a local government.
The certificate of succession or right of ownership (incl. the consent of a court to enter into a contract for division of an estate on behalf of a minor or an adult with restricted active legal capacity), the succession application and a copy of the successor's identity document must be sent to the specialist of Baltic securities transactions in the TCM and Securities Operations Department.
The Estonian Central Securities Depository transfers the money to the successor’s account after withholding the income tax. A successor who transfers the inherited securities to their own securities account must pay income tax when they sell their units.