Withdrawing money from the II pillar

Why is it harmful for you to withdraw money before reaching retirement age?

You will have to pay the 20% income tax on the amount withdrawn.
You will only receive your money after 5 to 9 months.
You will no longer be able to contribute to the II pillar for the next 10 years.

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.

EUR

By leaving the II pillar, over a period of 10 years I could lose
0EUR
Look at the exact calculation

The calculation is valid if payments to the second pillar have not been previously suspended.

The impact of your decision over the next 10 years

II pillar assets EUR

I will withdraw the money	Amount	I continue saving into the II pillar	Amount
The income tax I have to pay to the state	€	There is no additional tax liability.
The amount I’ll receive from the II pillar	€	The money will stay in my II pillar.	€
Over the next 10 years, I will receive 2% more in monthly salary, but I will have to pay income tax on this amount	€	For the next 10 years, 2% of my salary will be added to my personal II pillar every month (income tax is not deducted from II pillar payments)	€
Over the next 10 years, 4% of my social security tax will go to the state budget every month to cover current expenses		Over the next 10 years, 4% of the social tax paid on my salary will be added to my personal II pillar	+€
It is possible to earn a return if I invest independently.		You can earn a return because the money in the II pillar is invested. The long-term return of pension funds has been 3.8% per year*.	€
By leaving the II pillar, over the period of 10 years, I will earn a total of	€	By staying in the II pillar, I will save in 10 years	€
By leaving the II pillar, over a period of 10 years I could lose	€

*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.

From January 2021, money can be withdrawn from the II pillar before reaching retirement age.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:

Income tax

You have to pay 20% income tax on the amount to be withdrawn.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.

The money will not be available immediately

Please note that you will only receive the funds after 5-9 months, depending on when you submitted the application.

10 years of interruption

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.

The first pillar does not grow

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.

I pillar + II pillar = higher pension

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 calculator.

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.

However, if you have still decided to withdraw money from the II pillar, you will be able to submit an application in the internet bank. Application fee is 10 euros.
Depending on the date of the application, it can still be cancelled in the following months.
After the cancellation period, the decision cannot be changed for the next 10 years.
Payment from the II pillar will be made within 5-9 months after the submission of the application.

In addition to withdrawing money from the II pillar, it is also possible to suspend making payments to the II pillar. In this way, the money you have collected in the pension fund will remain in the pension fund, but new payments from you or the state will no longer be made there.
You will be able to submit an application to suspend payments in the internet bank. Application fee is 5 euros.
You can still cancel the application for a while. After the cancellation period, the decision cannot be changed for the next 10 years.
Payments to the II pillar shall cease 7 months after the end of the cancellation period.

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 population register.

If you have an Estonian residence address in the population register, you will receive a certificate with the personal identification code from the local government of your address.
If you do not have an Estonian residence address in the population register, apply to the local government of the county centre (Tallinn Civil Registry Office) for a certificate with your personal identification code.

It is most convenient to submit a withdrawal application in the internet bank or with the Pension Centre.

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 pension counselling.

To prepare an application at a bank office, take with you:

valid identity document;
document with an Estonian personal identification code (or corresponding population register certificate);
documents certifying the change of name or personal identification code (original or notarised copy), if necessary. A notarised copy of a foreign notary must bear an apostille or be legalised (except for a notarised copy of a notary of the Republic of Latvia, the Republic of Lithuania, the Russian Federation, the Republic of Ukraine, the Republic of Poland, the French Republic, the Kingdom of Belgium, the Kingdom of Denmark, the Republic of Ireland and the Italian Republic).

Application submitted	Payment
1.12-31.03	In September
1.04-31.07	In January
1.08-30.11	In May

Application submitted	Cancellation deadline
1.12-31.03	31.07
1.04-31.07	30.11
1.08-30.11	31.03

Application submitted	Cancellation deadline
1.12-31.03	31.03
1.04-31.07	31.07
1.08-30.11	30.11

Application submitted	Payments suspended from
1.12-31.03	1.09
1.04-31.07	1.01
1.08-30.11	1.05