President Kaljulaid argued that the removal of the so-called second pillar of the Estonian pension system will create a moral dilemma surrounding what those who have withdrawn money from the fund ahead of retirement should do, ERR's online news in Estonian reports.

The second pillar refers to mandatory contributions to pension pots made by employees, as against employers (first pillar) or private pension funds (third pillar). This was made mandatory in 2010, for a large part of the populace, though individuals were given the opporunity to opt out at the time.

The second pillar is mandatory for those born in or after 1983. Those born between 1942 and 1982 had the choice to opt out, when the scheme was introduced in 2010.

Abolition of the scheme has been on the table for some time, and was a central plank of the Isamaa party's pre-election manifesto.

"Is my social benefit to be diminished because I have used my second pillar money to pay for a grill-roaster, or leasing costs, or can I be on an equal footing with those people who have continued to invest, and therefore cannot demonstrate absolute poverty to the social security office at this point?" the president enquired, ERR's online news in Estonian reports.

"This is a huge moral dilemma," she added.

President Kaljulaid pointed out that if people were permitted to withdraw money accumulated in the second pillar, some would spend it whereas others would continue to save and invest.

If those people now retire, but the state pension does not provide an affordable income, they are likely to ask for social assistance, so a state that has made it compulsory for some people to join the second pillar and then subsequently freed them from that obligation will have to decide which path to go down.

"I have a huge moral problem [with this]," the President stressed.

Additionally, it may be the case that some people do not have enough resources in their second pillar to subsequently invest. However, another group may have a lot of debts and they are paying this off, which is a perfectly logical behavior for a single investor. But this is all secondary," she continued, referring to possible problems with retirement.

Expand the investment opportunities for small investors

The president also said that the Tallinn Stock Exchange does not currently play a role in providing sufficient investment opportunities for smaller investors, and called for ways to resolve this issue.

"Wouldn't Estonia, a place where ther are usually smart innovators, be able to create a layer between the two worlds which could offer a similar liquidity and choice of sectors that you would expect from the stock market, and at the same time match the volumes of the Estonian economy and businesses, and among other things, the volumes of our depositors?" the president said, referring to the gulf between the stock exchange and the co-financing.

According to the president, in addition to 32,000 investment account holders, many more people have savings, but nowehere to put them.

"In Estonia, there are no funds being invested in sectoral entrepreneurship," the President said, using the wood and timber industry as an example.

This is the reason why those who have money at their disposal place it in real estate. If there were other investment opportunities, perhaps real estate price increases would no thave been so rapid, Kaljulaid noted.

"I can see that neither banks, smaller funds, nor the stock market have been looking for a solution for a customer with an investment capacity of €10,000 - €50,000 up to now. There is no such solution at the moment. The Estonian economy is currently not being serviced, it is quite clear," noted Kaljulaid. adding that she sees market failures arising from this.

"It would be irresponsible for me to tell people to put aside 10 percent of their money to invest if they don't want their money to go abroad. We lack the funds to invest," she added.

Eesti Energia should have been floated on the stock market long ago

President Kaljulaid also said that state-owned energy company Eesti Energia could have been listed on the stock market as early as 10-15 years ago. This would have helped to circumvent the current situation as well, and Eesti Energia would not have had to deal with social problems hampering renewal, she added.

On the question of government bonds, the president said she was not opposed to them in principle, but preferred an approach which would link them to financing a particular project, rather than general government bonds.

The president also noted that the state effectively enters the market via Enterprise Estonia and that it should not be permitted to invest Estonian state money, especially in Tallinn and its vicinity.

The debate, entitled "direct participation for everyone in the Estonian economy," was also attended by SEB private banking strategist Peeter Koppel and Nasdaq Tallinn Stock Exchange manager Kaarel Ots.

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