Funds accumulated in the second pillar enough for 20 pension years on average

Among those saving in the second pillar, approximately 30,000 have reached the pension disbursement period; of those, 22,500 have filed disbursement applications. One half of those saving in the second pillar choose their disbursement solution to be a funded pension, as they have accumulated pension funds in amounts below 50 times the national pension rate.

Since the pension accumulation period has been relatively short in this age group, most are having to choose a funded pension as their second pillar disbursement solution, the disbursement amounts of which will fluctuate, as they are dependent upon the performance of the pension fund. Over the next few years, however, the share of funded pensions will decrease, as with each passing year people are accumulating more pension funds, and opportunities are arising for the conclusion of second pillar pension contracts.

“The purpose of a pension contract is to provide the payment of a pension in a fixed amount for the rest of the person’s life – no matter how long their retirement pension lasts. For example, if retirement takes place at 63, the average person will have accumulated in the second pillar an amount sufficient for 20 years of retirement, depending on the insurance company and whether their pension contract has been concluded with a guarantee period. With a pension contract, we as an insurance company are taking the risk that we might have to disburse more in pension than the person has accumulated in the second pillar,” said Triin Messimas, Management Board Member of SEB Elu- ja Pensionikindlustus.

The share of those who are retired is growing with each passing year, and increasingly there is a desire to use one’s second pillar funds. Nevertheless, there are those who are deferring retirement, and the main reason for it is working. According to the SEB Retirement Readiness Survey, 33% plan to continue working after reaching pensionable age and add at least six years of pensionable service, retiring officially at the age of 69.

SEB is the only bank whose insurance company also provides second and third pillar disbursement solutions. Hence, it is possible to receive all the pension solutions and the relevant consultation from one’s home bank both during and after the savings period. “The period of saving for one’s pension is long, and although the expected pension is calculated during a consultation, the process of receiving disbursements involves lots of details. Accordingly, it would pay to come in for a consultation definitely before reaching pensionable age,” Messimas added.

* The data used is based on statistics released at the end of 2015 on the state old-age pension, mandatory funded pension and voluntary funded pension by the Ministry of Finance, and the Pension Readiness Index Survey conducted by SEB and market-research company TNS at the end of 2015 in all three of the Baltic States, in which 1700 private persons participated.


For more information:

Maarja Gavronski
Project Manager for Communication
Marketing and Communications Division