II pillar funds

The II pillar is your personal reserve of funds, helping you to ensure a more carefree retirement age.

In the pension fund, your funds are invested. This gives you the chance to grow your money for retirement.

The II pillar accumulates money according to an efficient 2 + 4 scheme: you put in 2% of your gross salary and the state provides 4% from its part. Accumulation takes place in the form of monthly payments and based on your remuneration.

The monthly payment of the II pillar is only a small part of your salary, but if you collect it over the years, it provides a significant reserve.

It is convenient to accumulate your pension with Swedbank.

• Our funds have the lowest fees in Estonia. This way, you accumulate more money.
• Excellent yield. The rates of return of our pension funds are consistently among the best in Estonia. You can track the return of the pension funds on the website of Pensionikeskus.
• You can find a suitable fund based on your year of birth and save in it until retirement.
• Your pension is looked after by experts in their field.

When investing for retirement, it is important to be in a fund with the right risk level for your age. Higher risk is good if there is still a long way to go before the end of the accumulation period, but the level of risk needs to be reduced as retirement approaches.

In the past, you had to switch pension funds yourself for that. But our new unique funds do it for you. The proportion of equities and risk level related to that changes automatically over time in life-cycle funds. This way, you do not need to switch funds in the future. You can stay in this one fund until retirement.

However, if you do not want to invest in the most suitable fund for your age, you can choose another fund, such as Index or Conservative.

1. Find a suitable fund on this page.
2. Submit the application in the Internet Bank to direct monthly contributions and transfer already accumulated pension assets to suitable fund.
3. Contributions to the selected fund will start the following month.
4. Pension assets accumulated are transferred three times a year.

   When you submit an application to transfer previously collected assets to new fund between:

   • 1. August – 30. November, exchange takes place on the first working day of January;
   • 1. December – 31. March, exchange takes place on the first working day of May;
   • 1. April – 31. July, exchange takes place on the first working day of September.

1. Find a suitable fund on this page.
2. Go to the Internet Bank you prefer, find the II pillar page and the place where you can switch your pension fund.
3. By switching funds, you can choose among all of the II pillar funds in Estonia. Locate suitable Swedbank fund and select it. We also recommend to transfer the already accumulated pension assets.
4. Contributions to the selected fund will start the following month.
5. Pension assets accumulated are transferred three times a year.

   When you submit an application to transfer previously collected assets to new fund between:

   • 1. August – 30. November, exchange takes place on the first working day of January;
   • 1. December – 31. March, exchange takes place on the first working day of May;
   • 1. April – 31. July, exchange takes place on the first working day of September.

1. Follow your values by choosing a pension provider with sustainability ambitions. As of 31.03.2023 Swedbank pension funds have invested:
   • 492 million euros to funds that follow environmental, social and governance principles (ESG aspects);
   • 820 million euros in stock and bond baskets filtered with ESG aspects;
   • 66 million euros in ESG-themed stock baskets (e.g. electric cars, cyber security).
2. Sustainable pension funds exclude damaging industries. Swedbank has a “blacklist” for companies in which we don’t invest. Read about our Responsible Investment Policy here.
3. You can always check if your pension provider is paying attention to sustainable investments. The average ESG rating of our pension funds is AA (source: MSCI).

We asked pension savers how they would allocate 1000 euros for sustainable investment. Here are their answers.

When you retire you have three options to start using your money.

• Regular payouts, i.e. fund pension. If you set a period for payouts, which corresponds to your life expectancy, then you are able to use the money with a 0% income tax rate. For a shorter period, the income tax is 10%.
• One-off payout (can also be partial), on the amount of which you have to pay 10% income tax.
• Whole life insurance contract or insurance for a specified term.

You will already be able to withdraw money on more favourable terms 5 years before retirement. In case of no work ability, you can withdraw money tax-free.

If necessary, you can opt out of the II pillar and withdraw the accumulated amount before retirement age. Financially, this is a harmful decision for you.

The assets you accumulate in your II pillar are fully inheritable.

It is up to the heirs to choose whether to withdraw the accumulated money or to inherit the fund units, which will be transferred to their pension accounts. These options can also be combined: to withdraw part of the money and transfer part of the fund units to a pension account.

If the heirs decide to withdraw the money that has been saved, they will have to pay income tax on the amount.

Legal heirs can apply for the redemption of inherited investment units.