The third pension pillar makes it possible to preserve the standard of living one is accustomed to in older age

According to SEB Elu- ja Pensionikindlustus only 12 percent of working-age people are making regular contributions to the third pension pillar and on average complementary saving is started as late as 42 years of age.

Given the average income in Estonia, the first and second pension pillar combined make up 40 percent of the income before retirement. The recommended replacement rate for retaining one’s habitual standard of living in old age is about 65 percent of the income before retirement, which is achievable by saving in the complementary third pension pillar.

“The third pension pillar is a flexible opportunity to secure one’s retirement, because the size of the contributions can be determined by its owner and, if necessary, changed. Also, 20 percent of income tax is returned from the payments made each year. Regardless of all this, interest in the voluntary accumulation of supplementary pension remains low. Among the working-age population, the first priority is buying a home and putting children through school, and saving for pension becomes important later,” commented Indrek Holst, Chairman of the Management Board at SEB Elu- ja Pensionikindlustus.

According to SEB Elu- ja Pensionikindlustus more than 40 percent of the people who start saving are older than 44 and the amount of emphasis put on additional savings is also reflected in the size of the payments. Starting from 45 years of age, on average people pay 64.5 euros to the third pension pillar each month. Among younger people saving for pension the average monthly payment is 43 euros.

“At around 40, people are financially secure enough to be ready and capable to contribute more to their pension, which is when more attention will be paid to savings. However, when joining the third pension pillar as late as that, the accumulation period is often too short to reach your objective for retaining your standard of living in retirement age,” added Holst.

SEB Baltic Pension Outlook is available in English at www.seb.ee/Pension_outlook_november_2015.pdf


For more information:

Maarja Gavronski
Project Manager for Communication
Marketing and Communications Division
SEB Pank

Phone +372 665 5270
Mobile +372 5656 5785
Address Tornimäe 2, 15010 Tallinn
E-mail maarja.gavronski@seb.ee 
www.seb.ee