Over 121,000 people want to exit pension scheme second pillar

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Pensioners in Tallinn (picture is illustrative). Source: Siim Lõvi/ERR

According to data from the pension center (Pensionikeskus), as of March 18, 121, 663 people applied to exit the so-called second pillar of the Estonian pension scheme, or 15.8 percent of current members.

"At the beginning of the year, when the process of withdrawing money from the second pillar first started, there were more people who applied at first, after which the pace of applications decreased and then stabilized at around a thousand people a day," pension center board member Kristi Sisa told ERR. She predicted that that in the last days of March, when the first period for submitting the applications ends, the interest will pick up again.

Chief specialist at the Ministry of Finance's insurance policy department Tõnu Lillelaid had already predicted the mounting applications at the start and end of the period, along the lines of what has happened so far.

At the same time, Sisa stressed, that with the arrival of March 31, the possibility to withdraw funds from the second pillar will still exist, just that when submitting the application on April 1 or later, the sums of money will be received later.

Since the application of withdrawing the money has to be submitted at least five months beforehand, and payments are carried out only in January, May or September, an individual who submits an application at the beginning of the year would receive it in September, and so on.

As of March 18, 121, 663 people have submitted an application, and 768,344 pension accounts have been opened. According to the data, 58,617 of the applicants were male and 63,046 female.

The average age of those submitting their application was 39.

88,746 applications were submitted in the Estonian language, 32,890 in Russian and 297 in English.

Lillelaid had earlier told ERR that according to surveys it can be forecast that 25-30 percent of members will quit the second pillar, which means around 200,000 people.

The application submission is divided into three periods - January 1 to March 31, April 1 to July 31 and August 1 to November 30, while the timing of the payment disbursement depends on which of these periods was applied in. Funds will be paid five months after the end of the period.

The pension center emphasizes in its explanation that a lump sum will be paid, minus 20 percent income tax. The exact amount depends on at what price the fund manager can monetize the units of the pension fund, and also on the movements of the financial markets.

At the same time, it is stressed that an application can be withdrawn. After the application submission period through to March 31, an application can be withdrawn until July 31, for example.

Membership of the second pillar, referring to employer/employee contributions, was optional for most wage earners since 2010, until January of this year when a law allowing members to leave the scheme entered into force.

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Editor: Roberta Vaino

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