€1.5 billion paid out from second pillar following pension reform

Stacks of euro bills.
Stacks of euro bills. Source: Siim Lõvi/ERR

This month, more than 8,000 people will be withdrawing retirement savings from their second pension pillars, with an average payout of €9,304. Since Estonia's pension reform, nearly €1.5 billion has been paid out from second pillar pension accounts.

Payouts are disbursed to those exiting the second pension pillar triannually — in January, May and September.

Pension Center board member Kristi Sisa told ERR that a total of 8,290 people are withdrawing money this payout period, and that, together with income tax, a total of €77.138 million will be paid out from second pillar pension funds.

The average payout this time will total €9,304 with income tax and €7,457 without.

If there are less than five years to retire, the payment is subject to income tax at 10%. If there are less than five years left until retirement, 10 percent income tax must be paid on the payout. September's disbursement will earn the state €15.313 million in income tax.

2021 saw Estonia implement a pension reform in which participation in the second pension pillar was made voluntary and the opportunity was introduced for people to withdraw pension savings they had accumulated in their second pillar accounts.

Since the reform, some €1.5 billion has been disbursed in second pillar payouts.

As of the end of August, nearly 30 percent of those with second pension pillar accounts had withdrawn their money from them.


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Editor: Aili Vahtla

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