Supreme Court decision on pension reform dispute expected this autumn

The present-day Supreme Court of Estonia building in Tartu.
The present-day Supreme Court of Estonia building in Tartu. Source: Supreme Court of Estonia

The dispute between the President and the Riigikogu regarding the pension reform is to be resolved by autumn at the Supreme Court.

"The Supreme Court hopes to make a decision by autumn," Supreme Court press secretary Susann Kivi told ERR's online news in Estonian.

President Kersti Kaljulaid did not proclaim the mandatory funded pension reform bill for a second time on Friday and sent the law to the Supreme Court where it is brought before the Constitutional Court panel composed by Chief Justice of the Supreme Court Villu Kõve and Supreme Court Justices Ants Kull, Heiko Loot, Velmar Brett and Ivo Pilving.

The panel sent a letter to the president of the Riigikogu, the government, the legal chancellor, the justice minister, Bank of Estonia and the national audit office on March 25 asking to deliver an opinion on whether the reform is in conformance with the Constitution or not by April 25.

If deemed necessary, the Constitutional Court panel can forward the case to The Supreme Court of Estonia en banc. It is also determined by the panel whether the case will be decided by written or oral procedure.

The Riigikogu passed the mandatory funded pension reform bill on January 29, after hours of deliberations, with 56 votes for and 45 against. The government tied the vote to a confidence motion to avoid opposition stalling tactics. After the President rejected the bill in early February, the Riigikogu passed the Pension Reform Act unchanged for the second time on March 11.

"The bill at hand infringes on the Constitution enough to warrant returning the bill to the parliament," Kaljulaid said on February 7. "It is clearly a tax for the purpose of pension and national health insurance. If these sums are withdrawn, it clearly alters the purpose of the instrument. And that is unconstutional," Kaljulaid then explained.

The reform seeks to allow people to decide whether to join or leave the second pillar of the pension fund. People who wish to continue saving for retirement as they already have will not have to do anything. If a person wants to leave the pillar, join it or stop making payments, they need to submit an application to the bank or pension center. The reform will allow people the chance to invest their existing pension assets themselves.

The reform will result in unequal treatment in that people who have joined the second pillar of funded pension will be able to withdraw pension savings – including social tax allocated by the state – before reaching retirement age, while people who are the same age but have not joined mandatory funded pension will not be able to withdraw and use as they see fit 4 percent of social tax they've paid, Chancellor of Justice Ülle Madise wrote in January in a letter to Riigikogu Finance Committee chair Aivar Kokk.


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Editor: Anders Nõmm

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