Supplementary funded pension or III pillar is a part of the Estonia pension system.
Supplementary pension for You today:
- Contributions are voluntary for all persons
- Amount of contribution is determined by yourself and it’s changeable
- Possible to change the pension fund
- Possible to discontinue contributions (also to finish the contract)
- Benefit of income tax from the yearly contributions
Supplementary pension for You in the future:
- Helps to maintain the established life standard
- You can use the accrued sum since year 55
- Monthly or quarterly made payments are free from income tax
The estimates are that the state pension and the funded pension will together account for about half of a persons pre-pension income. According to the research, however, a person’s pension should be 65-70% of his or her previous income in order to maintain the established life standard. The advice is to lean on all three pension pillars to facilitate such level.
The supplementary funded pension is based on each persons voluntary decision to start saving either by contributions to a voluntary pension fund or by entering into a respective supplementary pension insurance contract with a life insurance company.
The supplementary funded pension contracts can be made with life insurers as pension insurance, or by acquiring pension fund units at fund managers. You can choose between three different pension products:
- Pension insurance with guaranteed interest
- Pension insurance with investment risk
- Pension fund