President signs pension reform bill into law following court decision

Kersti Kaljulaid at the opening of the Riigikogu last month.
Kersti Kaljulaid at the opening of the Riigikogu last month. Source: Siim Lõvi/ERR

President Kersti Kaljulaid has promulgated a controversial bill which reforms the Estonian pension scheme, after her Supreme Court appeal on the law was rejected.

"It is the duty of the head of state in the Republic of Estonia to see to it that our legislative practice was in the constitutional track. One goes to the Supreme Court not to win or lose, but to achieve legal clarity," the president said Tuesday, following the ruling.

"With an issue so extensive and having an impact on the whole society as extensively changing the existing pension system, it was important to achieve clarity on issues in debates on all possible levels. The Supreme Court has made its decision, and so I immediately promulgated the law," she added.

The president had, in line with her constitutional role, twice declined to sign into assent the bill, which would make membership of the so-called second pillar of the scheme voluntary.

In February, the bill was returned to the Riigikogu and, when it came back to the President unamended the following month, she opted to send it to the Supreme Court for judgment.

The president's main concern with the bill, at least so far as her role goes, was that it treats, she argues, members of the second pillar, meaning employer/employee contributions, differently from those who opt out of it or were never members.

Membership of the second pillar had been mandatory for most wage earners in Estonia since 2010 and is distinct from the state pension (first pillar) and private pension schemes (third pillar).

President Kaljulaid, a former economics adviser to Prime Minister Mart Laar, was on the same side of the fence as Bank of Estonia governor Madis Müller in being opposed to the bill. The International Monetary Fund (IMF) had also expressed concerns over the effects of the bill, primarily revolving around shrinking pension pots at a time when the population is aging.

The bill, the brainchild of the Isamaa party, passed its third reading at the Riigikogu in late January, by 56 votes to 45, at the 101-seat chamber.


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Editor: Andrew Whyte

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