Isamaa asks Bank of Estonia for second pillar pensions analysis
The Isamaa party is asking for impact analysis of both plans to make the so-called second pillar of the pensions system optional, and the effects the existence of the second pillar so far has had on the pensions system and the economy as a whole.
The second pillar is a fund which takes mandatory contributions from both employer and employee, as opposed to the first pillar (social tax-funded state pension) and third pillar (private pension schemes). Since 2010 it has been mandatory for most people at working age. However, Isamaa made its removal, or at least the removal of the obligation to pay-in, a part of its pre-election manifesto, managing to get the policy into the coalition agreement signed in April with the Centre Party and the Conservative People's Party of Estonia (EKRE).
Isamaa's Riigikogu group sent a letter to Bank of Estonia governor Madis Müller proposing analysis of the reforms, should they pass a Riigikogu vote and become fact from the beginning of next year.
Priit Sibul, Isamaa's Riigikogu grouping chair, said that statements the Bank of Estonia has so far made suggest that it has only looked at the effects of making the second pillar optional, rather than taking the effect of the second pillar as it is now, and the pensions systems as a whole.
"Isamaa estimates that the pension system analysis needs to be refined in its entirety. The Bank of Estonia should assess how the withdrawal of approximately €4 billion from the Estonian economy has affected our economic growth and the salary levels of the Estonian people," Sibul wrote in the letter.
"We cannot ignore the fact that the creation of the second pension pillar in the early 2000s coincided with tens of thousands of young people leaving Estonia. The previous decision to create a second pension pillar also affects today's retirees," he continued.
The letter also reportedly proposed analyzing potential risks which could affect the Estonian economy and second pillar pension fund over the coming decades.
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Editor: Andrew Whyte