Unemployment fund reserves approaching €1 billion

The Unemployment Insurance Fund (Töötukassa) office on Tartu's Vaksali tänav.
The Unemployment Insurance Fund (Töötukassa) office on Tartu's Vaksali tänav. Source: Aili Vahtla/ERR

As of September, the market value of the Estonian Unemployment Insurance Fund's (Töötukassa) reserves totaled €962.9 million. Its yield, however, has been very small in recent years.

At the end of 2018, Töötukassa's reserves totaled €812 million; by this September, its reserves had increased to €962.9 million.

Töötukassa's funds were previously managed by external partners, but since 2012 have been held in the government's liquidity reserve. Unemployment insurance premiums received from employers and employees each month are automatically directed to the State Treasury, which decides how this money will be used — whether it will be invested or whether it will be used to finance budget deficits.

Lauri Kool, senior specialist at Töötukassa's Communications Department, told ERR that as investments are very short-term, yields are low — 0.03 percent at the end of 2018, for example, and 0.04 percent at the end of 2017.

"Töötukassa receives interest income to the extent that it manages to earn into the liquidity reserve, with the clause that yields do not drop below zero," Kool explained. "Interest income goes into the same account that is managed by the ministry."

Töötukassa has the right to receive funding from the State Treasury that is needed for Töötukassa's economic activities, such as expenses and benefits, but according to Kool, current legislation does not allow for Töötukassa to ask for its money back from the State Treasury in full.

He added that Töötukassa's accounting keeps track of the size of Töötukassa's assets in the State Treasury, and once per quarter, they can review the treasury's liquidity reserve report which reflects these assets.

"How much of the money from Töötukassa's account is actually left, Töötukassa doesn't know," Kool admitted.

The state's liquidity reserve holds the money of the central government, the Estonian Health Insurance Fund (Haigekassa), Töötukassa, state foundations, and European Commission money paid in advance for EU funding.


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Editor: Aili Vahtla

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