Deadline Passes for Raising Pension Payments
The Finance Ministry counted 106,140 applications by the September 15 deadline for taking up a government offer to increase second tier pension copayments, reported ETV.
The number, which represents a sizable chunk of Estonia's 645,000-strong workforce, met forecast expectations.
Facing a deep recession in 2009, the Estonian government froze state contributions to the second pillar of the three-pillar pension system from June 2009 to December 2010, and made only reduced contributions in 2011. Meanwhile, second-pillar pension holders had the right to continue making their copayments.
To make up for the losses incurred in the recession, the government is giving people the option of increasing both individual (from 2 to 3 percent) and state copayments (from 4 to 6 percent) for the four years from 2014 to 2017. Those who continued their payments during the recession were rewarded with automatically increased state contributions, with the option of raising their own payments as well.
Altogether, 209,000 people had continued making payments during the recession.
The government estimates that the first two mandatory pillars of the pension scheme will yield the equivalent of about half of a pensioner's work income, and that a person's pension should be 65 to 70 percent of previous income in order to maintain the established living standard.
The share of the 33-percent social tax allocated for pensions is 20 percent of the gross payroll.