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Pension Reform 2021

Pension Reform 2021

Exemption from contributions to II pillar

Contributions to the second pillar of funded pension can be suspended as of 1 January 2021. If you wish to neither continue contributions to the second pillar nor withdraw the accumulated funds, you can submit an application for exemption from contributions.

The application can be submitted periodically:

  • from 1 January (in future, from 1 December) to 31 March – for exemption from contributions as of 1 September;
  • from 1 April to 31 July – for exemption from contributions as of 1 January;
  • from 1 August to 30 November – for exemption from contributions as of 1 May.

18-year-olds and younger

You can submit an application for exemption from contributions if you are at least 18 years old. Where the application is submitted by a person aged 16 or 17, the person’s legal representative must provide written consent, which, in turn, is based on the consent of the court.

If you submit the application by 31 July on the year you turn 18, you will not be obliged to make funded pension contributions upon starting employment after 1 January.

Ten-year rule

If you have submitted an application for exemption from contributions and have not cancelled same, you will have the right to resume funded pension contributions after 10 years have passed since the termination of contributions. For this purpose, an application for resuming contributions must be completed after 10 years have passed.

Should you decide to submit an application for resuming funded pension contributions after ten years have passed, you will have the obligation to make contributions for 10 years. Should you decide to submit an application for exemption from contributions after this period, you will no longer have the right to submit an application for resuming contributions or to continue funded pension contributions.

No work ability

If you are a person who has been established to have no work ability and who has withdrawn second pillar funds in connection therewith, you will have the right to resume contributions to the second pillar funded pension, if you so desire, after being assessed to have partial or full capacity for work.

You will have the right to submit the application for making contributions without the ten-year restriction.

Cancelling the application – application for making contributions

The application can be cancelled until the end of the period for submission of the application for exemption from contributions. For this purpose, you will need to submit an application for making contributions.

The application for making contributions can be submitted as of 1 January 2021 in the same periods:

  • from 1 January to 31 March;
  • from 1 April to 31 July;
  • from 1 August to 30 November.

The application for making contributions is also important, if 10 years have passed since suspension of the funded pension contributions or withdrawal of funds from the second pillar (which also suspended contributions). In this case, you can resume funded pension contributions by submitting the application for making contributions by the following deadlines:

  •  by 31 March – contributions will resume as of 1 September;
  •  by 31 July – contributions will resume as of 1 January;
  •  by 30 November – contributions will resume as of 1 May.

The application for making contributions can be cancelled until the end of the period for submission of the application. For this purpose, you will need to submit

  • the application for exemption from contributions or
  • the application for withdrawing second pillar funds.

The application must be submitted during the same period and must not, in turn, be cancelled.

If you have submitted an application for making contributions, you will have the right to suspend the contributions again after at least 10 years have passed since making the first contribution.


Example of cancellation of application: Tiiu wishes to suspend funded pension contributions and files an application for exemption from contributions on 1 March 2021.

The application would take effect on 1 April 2021 and the payments would be suspended as of 1 September 2021.

Tiiu finds out that, upon suspension of contributions, contributions to the second pillar cannot be continued for a period of 10 years.

She changes her mind: she files an application for making contributions by 31 March 2021 at the latest, thus cancelling her application for exemption from contributions.