Riigikogu passes extraordinary €7 pension hike

While significantly less than the €100 promised by the Centre Party ahead of the 2019 general election, the Riigikogu passed an extraordinary €7 pension hike on Wednesday. Source: Christoph Scholz/Creative Commons

The Riigikogu passed a government-initiated bill of amendments to the State Pension Insurance Act on Wednesday according to which an extraordinary €7 pension increase will be implemented on April 1, 2020, in addition to the increase in pensions from indexation.

Altogether 76 MPs voted in favor of the bill, with none against and no abstentions.

The base pension amount is to increase by €7 in addition to the increase from indexation on April 1, 2020. Total pension growth will be an estimated €45.

The extraordinary increase in the base amount will increase the pensions of all old-age pensioners as well as those receiving pensions for incapacity for work or loss of a provider.

Pensioners not active in the labor force will benefit most from the increase, which in total concerns some 330,000 people in 2020 and is estimated to reduce the share of people in relative poverty by 0.6 percentage points.

For years already, Estonia has maintained the lead in the EU in terms of the share of elderly people at risk of poverty; in 2017, altogether 47.5 percent of people aged 65 and over lived at risk of poverty.

At the same time, spending on old-age pensions by the state in Estonia is one of the lowest in Europe; in 2018, the average old-age pension accounted for 41 percent of the average net monthly salary in Estonia, the smallest indicator in the EU.


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Editor: Aili Vahtla

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