Minister calls to halve 10-year wait on rejoining Estonia's second pension pillar

Finance Minister Jürgen Ligi (Reform) has proposed halving the 10-year waiting period for rejoining the second pillar of the Estonian pension system, questioning the necessity of the current rules, and advocating for more flexibility in the system.
The second pillar refers to employer/employee contributions, and membership of it was mandatory until the option to opt out was granted by a change in law put in place by the EKRE-Isamaa-Center coalition, in office 2019-2021.
At present, those who have exited the second pension pillar face a ten-year moratorium on rejoining, but Minister Ligi has said this period should be reduced, suggesting it should be "at least halved."
Ligi expressed his doubts about the length of this waiting period, stating, "There isn't a good answer. I've been asking the same question."
The purpose of the ban is to encourage long-term commitment to the system, and/or to deter individuals from frequently withdrawing and rejoining.
Ligi himself questioned the logic behind that, however, noting that "you can't make gold out of straw."
He added: "My proposal would be to shorten the time restriction for reinstating contributions... It should be reviewed entirely. But for sure, it should be halved."
Ligi also pointed out that the pension pillar is "not a savings account which you can continuously withdraw from and deposit into."
There are circumstances where withdrawals may be justified, however, Ligi said, but this would need to be a "pressing reason."
"Before this whole affair (the pension reform – ed.), I consulted with experts, and they suggested that withdrawals should be allowed in exceptional cases," Ligi said.
The first pillar of the Estonian pension system refers to the state pension, while personal private pension schemes make up the third pillar.
Back in 2019 when the second pillar reform was first put forward, Ligi said it would be a mistake, adding that only around a fifth of Estonians had a sufficient grasp of economics and demographics to be able to cope with a voluntary second pillar system. Estonia did not on the whole have levels of accumulated savings on a par with many western countries, Ligi added at the time.
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Editor: Andrew Whyte, Marko Tooming
Source: 'Otse uudistemajast'