Minister of Social Protection Signe Riisalo (Reform) highlighted that increasing the base amount of pensions as well as the basic exemption for pension-aged people are just two of several steps that have been taken in Estonia over the past two years to improve older people's security, according to a press release.

Other steps already taken or in the works include increasing monthly benefits for pensioners living alone from €115 to €200 and a nationwide care reform aimed at making care home services more affordable.

According to SKA Director General Maret Maripuu, the latest change is significant, as it means that, going forward, the average old-age pension will be tax-free.

"Pensioners are currently subject to the general €500 basic exemption, which begins to decrease as income increases," Maripuu explained. "Starting in January, however, the basic exemption for those who have reached retirement age will be €704, and that won't change even if a pensioner continues to work. Thus, all retirement aged people whose [monthly] pension exceeds €500 next year will receive a bit more money starting in January."

The change to the basic exemption is tied to an individual's age — the €704 basic exemption will also apply to those who have opted to postpone retirement, as well as those who will reach retirement age within 2023.

Next year, the retirement age in Estonia will be 64 years and 6 months; those born before July 1, 1959 will reach retirement age in 2023.

The increased basic exemption will not apply to other categories of pensioners, such as recipients of special pensions or those receiving a pension for the incapacity for work.

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