Coalition to tie proposals to amend pension reform bill to confidence vote

Euros. Source: Karin Koppel

By a decision of Estonia's governing coalition, the opposition's hundreds of proposals to amend the pension reform bill will be deleted by linking the bill to a confidence vote, Postimees reported.

Tthe law allows the government to link whatever legislative draft submitted by it to a vote of confidence in the government. This allows to avoid filibuster in the parliament.

Chairman of the parliamentary finance committee Aivar Kokk (Isamaa) told participants in a meeting of the bill's committee with interest groups on Thursday that there is a clear political will for the reform to be implemented.

Under Isamaa's initial plan, the law would have entered into force on January 1, 2020. Kokk said hopefully the legislation introducing the reform is adopted quickly in the next few weeks or at least within the next month.

"After that, it will take at least a year until implementation," he said. The finance committee is to discuss the pension reform next week and the bill is expected to be put to the second vote in the plenary in the week after next. 

On Thursday, Kokk came up with several ideas to amend the current bill, including one which would allow people who have accumulated more than €10,000 into their mandatory pension fund to withdraw the whole amount at once.

The previous idea was to set a ceiling of €10,000 on withdrawals. At the same time, the period of advance notice in leaving the second pillar would be extended from one month to five months, meaning that more time would be required for leavers of the second pillar to get their savings. 

Kokk made his proposals public an hour before Thursday's meeting of the finance committee, in which representatives from almost 20 institutions and interest groups took part. 

He said the amendments to the bill proposed by him have received the coalition's nod of agreement.

The amendment should direct people to a well-considered decision. This is important, as for those who leave the second pillar the first time window to rejoin the second pillar arrangement will open again after 10 years. The longer period between applying for and the withdrawal of savings also benefits fund managers by giving them time for adjustment.

Opposition Reform Party MP Maris Lauri said the coalition's steps indicate a wish to get as much money as possible into the state budget quickly in the form of income tax. An income tax of 20 percent has to be paid on withdrawals from the second pension pillar.  

Several representatives of interest groups have recommended that quitting the second pillar should happen step by step. Some participants in Thursday's discussion pointed out that there should be a reasonable amount of time, at least a year or 18 months, between the adoption of the law and its stepping into force to make sure that IT systems and administrators of investment accounts are ready for the change. 


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Editor: Helen Wright

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