- Estonian pension system
- I pillar
- II pillar
- III pillar
Estonian pension funds have a rather safe background – they are supervised on many levels and the investment restrictions are very precisely defined.
But why are the funds as tools for collective investment so popular in the world? There are four main reasons for that:
Despite of the low risk level, all mandatory pension funds are open for investment risk. This means that the value of a unit depends on the value of the investments of the pension fund – the price of a unit may rise or fall. Funds that invest more into equity and less into bonds are generally riskier than the ones that invest mostly or only into bonds. Funds with higher risk level have a bigger chance to yield higher rate of return, but the risk to lose with an investment is also higher.