In its latest forecast, the Ministry of Finance has indicated that the average old-age pension in Estonia, which, this year is €595 per month, will rise to €704 in 2023.
The increase takes into account the introduction of both an extraordinary €20 monthly increase as well as basic income tax exemption for recipients of the state pension.
The tax exemption also means pensioners will pocket a larger share of their pensions, which according to the Ministry of Finance will help speed up the recovery of their purchasing power.
Pensions are indexed annually in Estonia, with increases coming into effect every April, according to calculations which take into account the pension insurance component of the social tax for the previous year, as well as inflation. An individual pension is calculated for each person, depending on his or her previous work contribution.
This year, the government set the pension index at 1.079, meaning after indexation, the basic monthly pension amounts to €255.76 or €7,718 annually. The national pension, for those who lack the required 15-year minimum pension qualifying period is €275.30.
Editor: Michael Cole