Rõivas: Change of pension system 'fundamentally wrong' ({{commentsTotal}})

The Reform Party’s Taavi Rõivas criticized the announcement of the government to give the amount of years worked more weight in calculating pensions. The hope of many that pensions would go up would now be disappointed, he said. Rõivas is Estonia’s former prime minister as well as a former minister of social affairs.

“In the wake of this unexpected change the hope of plenty of working people for better pensions will be disappointed,” Rõivas told ERR’s Estonian news portal on Thursday. “I think this u-turn in terms of the system of people’s pensions is fundamentally wrong.”

Their old-age pension needed to give people a feeling of security, and changes that happened without any kind of broader discussions and only debated in the cabinet did serious damage to this, Rõivas added. Disconnecting pensions from income was not the right way.

According to Rõivas, the government’s step means that then-prime minister Mart Laar’s pension reform in the late 1990s will be reversed. While in the times of the Soviet occupation as well as in the early 1990s the years worked had counted the most, in 1999 the component had been added to the system that everybody’s individual work was taken into account in the form of their taxed income. “It goes without saying that this u-turn will work against the motivation to pay higher salaries, and for many the growth of pensions in the future will slow down,” Rõivas said.

The former prime minister pointed out that then-minister of social protection, Margus Tsahkna (IRL), had suggested this step before, but that his government had rejected it as “too left-wing”.

The government decided in Thursday’s cabinet meeting to make changes to the pension system, the two most important of which are pegging the retirement age to the average life expectancy starting 2027, and to give the amount of years worked more weight again in the calculation of individual pensions. This, according to Minister of Finance Sven Sester, is expressed in the direction taken to change the three-pillar pension system so that in the first pillar, the years worked counted, in the second pillar, the amount of social tax paid, and that the third pillar depended on people's voluntary contributions.

Editor: Editor: Dario Cavegn

Journalist Toomas Sildam.

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