Studies show that although the retirement age has risen steadily over the past 25 years, state spending on pensions has increased during crises in particular, as extraordinary pension hikes have been implemented.

Despite this, nearly half of Estonia's pension-aged residents live in relative poverty, topping EU rankings in this regard.

Over the past decades, the ratio of pensions to average incomes has likewise continuously declined, with pensions now amounting to just around half of the latter. This has prompted the Riigikogu's State Budget Control Select Committee to look for solutions to ensure the sustainability of the country's pension system.

"What needs to be done is that each of us contributes more to the second and third pension pillars, and the state will review the regulation and look for ways to improve it," said MP Mart Võrklaev (Reform), deputy chair of the State Budget Control Select Committee. "We will certainly continue these discussions both in the Riigikogu and at the government level."

"This situation has already improved significantly," noted LHV Asset Management CEO and Finance Estonia representative Vahur Vallistu. "As of this year, it has been possible to increase your contributions to the second [pension] pillar. More and more people are also saving in the third pillar, where they can contribute up to 15 percent of their net salary annually, or up to €6,000."

"The fundamental question remains whether our so-called children's generation is essentially capable of supporting our parents' generation," said MP Urmas Reinsalu (Isamaa), chair of the Riigikogu select committee.

"We can see that, from a century-long perspective and across generations, the demographic issue is the most serious," he added.

Reinsalu believes the solution lies in increasing the birth rate and economic growth. Currently, pension funds invest the vast majority of people's savings outside of Estonia, and he finds that this does not contribute to the country's economic growth.

"Essentially 80-90 percent of this money is continuously leaving our economy," Reinsalu highlighted. "This means that we allocate an additional 1 percent GDP to second-pillar payments, yet we're essentially cooling down our already declining economy by another 90 percent. I think that's definitely a problem."

Võrklaev, meanwhile, doesn't support forcing pension funds to invest in the Estonian economy.

"I think this sort of free investment is still the most reasonable approach — pension funds must ensure that this money grows as quickly and efficiently as possible," he said. "However, pension funds must also be given certainty that that money is secure. The dismantling of the second pension pillar system certainly undermined that confidence."

"The top priority is always to generate the highest possible returns for savers, which means that, to a large extent, investments will naturally be focused outside Estonia," Vallistu explained.

"But another factor is that investments in Estonia — such as in local real estate — are inherently less liquid," he continued. "The greater the uncertainty about future volumes, the harder it is to make such investments."

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