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Temporary suspension of contributions 2020

From 1 July 2020 to 31 August 2021, the 4% contributions made to the second pillar from social tax are suspended.

*An exception applies for those born between 1942 and 1960 who have already reached retirement age (old-age pension) but continue to work. Contributions will continue to be made to the second pillar as usual for these individuals.

Supplementary contributions to the parental pension will continue to be made by the state as usual.

Application

During October 2020, one may submit an application for temporary suspension of contributions, which suspends the 2% employee contribution to the funded pension. The application may be submitted on the self-service environment on the website www.pensionikeskus.ee or at a bank. There is a fee of 0.65 euros for submission of the application.

After the application is submitted, payment of the 2% contributions will be suspended from 1 December 2020 to 31 August 2021.

The application may also be submitted by those born between 1942 and 1960. In their case, both the 2% and 4% contributions will be halted.

Submit an application: Enter your account
NB! To finalize the application, please return to the website of Pension Center after making the payment in the Internet Bank!

Compensation

Those who continue making 2% contributions during the period when the 4% contributions to the second pillar from social tax were suspended will later receive state compensation for the suspended 4% contributions.

Additional transfers will be made by the state to the second-pillar pensions of these individuals in 2023–2024. The amount compensated depends on the total amount of contributions made by the individual into the second pillar during the temporary suspension of contributions: everyone will be paid twice as much as their own contributions to the second pillar during the period in question.

If the average return on the second-pillar pension funds from 1 July 2020 to 31 December 31 is positive, the amount transferred to every person’s second pillar from the state budget will also increase by the average return.
The compensation does not depend on whether the specific person is employed in 2023 and 2024 and makes contributions to the second pillar. If the person is not participating on the labour market during 2023-2024 but did make the 2% contributions from their wages during the temporary suspension of contributions, they will receive compensation for their contributions.

For more information, visit the Ministry of Finance website (in Estonian).

Timetable

Dates Changes
01 July 2020-31 August 2021 The 4% contributions made from social tax to the second pillar of all people who have joined the pension scheme are suspended, except for those born 1942–1960*.
01 Oct. 2020-31 Oct. 2020 Submission of an application for temporary suspension of compulsory funded pension contributions, which suspends the 2% employee contribution to the funded pension. Payment of the 2% contribution will be suspended in this case from 1 December 2020 to 31 August 2021. The application may be submitted through AS Pensionikeskus or at a bank.
Those born 1942–1960 may also submit an application*.
Starting 01 Nov. 2020 Employers will check whether their employees’ contributions to the funded pension are suspended or will continue
01 Dec. 2020-31 August 2021 Application submitted – the 2% payment must not be deducted from the employee’s wages.
No application submitted – the 2% payment will continue to be deducted from the employee’s wages as usual.
Starting 01 January 2023 Compensation of payments. Additional 4% transfers will be made by the state to those who continued contributing the 2% payments. The sum total of contributions by each person between 1 July 2020 and 31 August 2021 will be counted. There is no compensation of payments to those born 1942-1960*.