A contribution to the funded pension consists of two components:
- The withholding from salary, which constitutes 2% of your monthly gross salary. It shall be withheld by the accountant of your employer.
- The payment made by the state out of the social tax paid by you today, which is 4% of your monthly social tax. Thus the state retains 33%-4%= 29%of the social tax. 4% of the social tax is accounted for you by the Estonian Tax and Customs Board.
For example: If your gross salary is 1,000 EUR per month, and you subscribe to the funded pension, you will pay 2% or 20 EUR per month to your pension account. The state will add another 4% or 40 EUR, which means that in total, 60 EUR per month will transfer to your pension account.
Although the contributions to the funded pension will be withheld by your employer, you are still the actual payer. It means that the contributions are not connected with your employer and change of employer will not prevent or affect your saving for the funded pension.
Your employer will transfer the 2% that has been withheld from your salary to the Tax and Customs Board, which will add, on behalf of the state, 4% of your social tax to the amount already paid by you. The whole amount will be transferred to the bank account of the Estonian Central Depository for Securities in the Bank of Estonia.
The Estonian Central Depository for Securities (Estonian CSD) as the registrar of the Estonian Central Register of Securities will calculate the number of pension fund units corresponding to the received amount to your pension account, and will transfer the money to the pension fund chosen by you.
The Estonian CSD will notify you about the balance of your pension account, if requested, at least once a year. The state of the pension account can be monitored on current basis on this website (www.pensionikeskus.ee), and here you can also order an account statement to your e-mail address. You can also monitor the balance of your pension account via all account administrators (banks) in bank offices or through the Internet banks.
- Collection of contributions start on January 1 after a mandatory person had his 18th birthday.
- Contributions can be made only to one chosen fund at a time.