Occupational pension

You care for your employees, they care for your company

Skilled employees are highly valued. A strong value proposition retains employees and gives you an advantage in recruitment.
With an occupational pension, you value your employees’ future and help them save for their retirement.
Your employee gets more – contributing to an occupational pension is more favourable than increasing the wage fund.

Invite us over and let’s talk about how to make occupational pension work for your business.

Why is contributing 100 € to occupational pension more useful than 100 € for a pay rise?

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It costs 134 € to increase an employee’s gross wages by 100 €: 57 € of this goes to taxes and 77 € is actually received by the employee. The calculation is based on the assumption that the employee has joined the II pillar and tax-free income rate has not been taken into account.

Occupational pension is a great way to invest in your employees’ future.
Occupational pension is part of the III pillar. While the person usually contributes to the III pillar themselves, the employer can also contribute to the III pillar through the occupational pension.
By contributing both, the employee can build up for retirement in a quicker way.
Occupational pension is a very common way of motivating employees in many countries.

Income tax credit. Employer’s contributions to the III pillar are exempt from income tax (up to 15% or €6,000 of the employee’s gross annual wages).
Motivated employees. Investing in the future of your employees increases their motivation.
Socially responsible company. Good image gives you a competitive edge.
Visible contribution. Employees can track how much they have already accumulated at any time in the Internet Bank.

Estonia’s only occupational pension funds. We are the only bank where you can find three III pillar funds with limited redemption specifically intended for occupational pension, where you can start withdrawing from the age of 55.
Low fees. Our III pillar funds are the most favourable in Estonia. This way, a larger amount of money is invested.
Responsible investment. All our funds follow sustainable investment principles.

How to begin?

Hundreds of companies in Estonia already use the occupational pension. At Swedbank, this is also an integral part of our motivation package.

We have made it easy and convenient to join an occupational pension scheme. We will visit you, help you find the best solution, train your employees, and support you during implementation.
Book a consultation and let us make things easier together.

How does it work?

The amount of the occupational pension contribution will be decided by the employer. This can be a fixed percentage of wages or a certain amount.
The employer informs the employee that they can join an occupational pension scheme. If an employee does not already have III pillar, they must first submit an application to join the III pillar.
The agreement allows the employee to choose the fund themselves or from among those designated by the employer. For example, employers can give preference to funds from which withdrawals cannot be made before the age of 55.
If the employer does not specify the funds to which the employee must contribute, the employee will provide the employer with the fund’s ISIN code (available on the fund’s page).
Once the III pillar has been opened and the fund selected, the employer can start to contribute to the employee’s III pillar.

The employer contributes an agreed percentage of the employee’s gross wages directly to the employee’s III pillar, plus the employer’s contribution.
For example, if an employee contributes 4% of their gross wages and the employer adds the same amount each month, 8% of the gross wages will accumulate in the pillar.
In addition, the employee may make contributions to the III pillar themselves. Employees can get income tax relief on their own contributions.

Contributions to the III pillar can be made in one calendar year without fringe benefit in the amount of up to 15% of gross income, but this amount cannot exceed €6,000. Both the employer’s and employee’s own contributions will be taken into account.
The employer must keep records of the fulfilment of the tax-free threshold cumulatively from the beginning of the calendar year.
The employer’s contributions to the III pillar are exempt from income tax.
On contributions, the employer pays social tax, unemployment insurance premium, and contribution to mandatory funded pension (II pillar) if the employee has joined the II pillar.

You can check whether an employee has joined the III pillar on the website of the Estonian Funded Pension Registry under the section Accounting.
The employer must submit a separate report (Form TPS) to the employee and to the Estonian Tax and Customs Board on the III pillar contributions paid.
Contributions must be declared on Form TSD (Annex 1 or 2).
You can find the information you need to make a contribution in the pension fund prospectus. When making a contribution, the payment purpose field must be left blank, while other information (the person’s pension account number and processing code) must be provided. The payment form requirements can be found here.

The I and II pillar account for around 40% of pre-retirement income. With the III pillar, you can make your retirement much more enjoyable.
You do not have to save in the III pillar alone. Your employer can also invest in your future.
The III pillar is one of the most advantageous ways of investing for the long term, as you get income tax credit on contributions.
The III pillar units belong to you. If you decide to leave your job, you will still have your III pillar units. In the same way, the units are inheritable.

Submit an application in the Internet Bank to join III pillar pension fund.
If your employer has no restrictions on the fund you can choose, let them know which pension fund you have chosen and the ISIN code of the fund (you can find it on the fund page). This is needed by the employer to make transfers.
Now your employer can start contributing to your III pillar.

You get income tax relief on an amount not exceeding 15% of your annual gross income or €6,000 per year.
The income tax relief threshold applies jointly to contributions made both by you and the employer.
You can only get income tax relief on your own contributions. You will not get income tax relief on your employer’s contributions, as these contributions are not subject to income tax.
When calculating the tax-free threshold, the contributions paid by the employer are taken into account first.

The occupational pension is highly valued among Swedbank employees, with more than half of all employees having joined. The system is simple: the employee contributes 2% of gross wages each month, to which the employer adds 2%. For example, in case of gross wages of 2,500 euros, almost 100 euros goes to employee’s III pillar every month.

Pension funds

We have the only funds for occupational pension in Estonia. Our occupational pension funds are with limited redemption, i.e. you can withdraw money from the fund from the age of 55. This means that the employee is consciously saving for the future, not for immediate consumption.

The funds have different levels of risk, and employees can choose the fund that suits their risk tolerance. If the employee wishes, they can switch funds during the accumulation period, but only between funds with limited redemption.

Occupational pension can also be accumulated in a fund with no withdrawal limit, but in this case, it has to be taken into account that the employee can withdraw the money at any time. View III pillar funds without limited redemption.

V100 index

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Accumulation period: at least 10 years
Current annual fees: 0.29%
Risk level: 6/7
Index fund

More about the fund

V60 index

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Accumulation period: at least 7 years
Current annual fees: 0.29%
Risk level: 4/7
Index fund

More about the fund

V30 index

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Accumulation period: at least 5 years
Current annual fees: 0.29%
Risk level: 3/7
Index fund

More about the fund