From 1 January, several changes are in force that make the II pillar even more profitable for pension savers.
The most important aspect is to save long term, as this is the only way to ensure a better retirement for yourself.
Need some advice? Call our designated pension line 631-0310.
When you retire, you now have 3 different ways to use the money:
You will already be able to withdraw money on more favorable income tax terms 5 years before retirement. In case of no work
ability, the money can be withdrawn without having to pay income tax.
From September 2021, you can invest your pension assets yourself through a pension investment account. This enables you to
create your very own pension fund and manage its investments yourself.
The framework for a pension investment account is still being developed, but we will already be able to talk about it in
more detail in the coming months.
An application for joining an investment account can be submitted from 1 April 2021 and you will be able to start investing
yourself from September.
If necessary, you may leave the pillar and withdraw the accumulated funds. Financially, this is a harmful decision for you.
You may read more about the change on the homepage of the Ministry of Finance.
From January 2021, money can be withdrawn from the II pillar before reaching retirement age. It is not beneficial for you due
to the following reasons:
You have to pay 20% income tax on the amount to be withdrawn. By collecting until you have reached retirement age, you will
be able to use the money without paying income tax.
Please note that you will only receive the funds after 5-9 months, depending on when you submitted the application.
Having withdrawn money, you will not be able to collect funds in the II pillar for the next 10 years. During this period,
you will also not receive the state’s contribution to the second pillar. The money that would otherwise accrue to your
personal pension account under the
2 + 4 scheme will now be used in the state budget to cover the current expenses of the state. The higher your income,
the greater your loss.
From 2021, a new formula for
calculating the I pillar will apply. Before that time, people accrued more funds in the I pillar, if they had not joined
the II pillar. From now on, the impact of accruing funds in the II pillar will be minimal for your I pillar. If you want to
accrue as much money as possible for the future, it is worth continuing to collect funds in the II pillar.
In the future, a pension will most likely be higher for those who continue to collect funds in the II pillar. Calculations
by the Bank of Estonia, the Ministry of Finance and the banks indicate that the total pension received from the I and II
pillars is higher than the pension received from the I pillar only. The easiest way to confirm this yourself is with the
help of the Social Insurance Board’s
The calculation is valid if payments to the second pillar have not been previously suspended.
*Index of Estonian pension funds since their creation in 2002 (as of 30.11.2020). Past return does not ensure similar return
in the future.
Patience is the companion of wisdom. Know that there is no deadline for withdrawing your pension. You can do this now and in
the future, but please be aware that after the decision takes effect, you will not be able to re-think your decision for the
next 10 years.
To withdraw money from the II pillar, you must have an Estonian personal identification code. An application cannot be
submitted without a personal identification code.
Forgot your personal identification code? Make a request to the
It is most convenient to submit a withdrawal application in the
internet bank or with the
To do this, you must have a functional digital identification tool, such as an ID-card, Mobile ID or Smart-ID. Please note
that there is a fee for submitting a withdrawal application and you must have a sufficient amount in your bank account to
submit the application. When submitting an application through the Pension Centre, you can pay the service fee via 5 local
banks (Swedbank, SEB, LHV, Luminor, COOP).
If you do not have a digital identification device, you can make a payment application at a bank office. To do this, you
must first book an appointment for
To prepare an application at a bank office, take with you:
If you have any questions or suggestions, send a bank messages. We value your opinion!