Estonian pension system
The Estonian pension system is aimed to help a person to maintain his or her previous income and life standard after retirement.
Pension system is divided into three pillars:
I pillar: State pension
II pillar: Funded pension
III pillar: Supplementary funded pension
The state pension should guarantee the minimum income necessary for subsistence. It is based on the principle of redistribution, i.e. the social tax paid by today’s employees covers the pensions of today’s pensioners.
The amount of the state pensions of the future pensioners is largely dependent on the number and income of the future tax payers. The pensioner cannot affect it.
The funded pension and supplementary funded pension put a person in charge of his or her own future – the amount of his or her pension depends on how much he or she has put aside for the retirement age during working life.