PensionIf you want to rest assured that you have done everything for your subsistence at older age, it would be wise to effect both the second and third pillar pension insurance at early age. The Estonian population is unfortunately ageing; the number of people in active employment and the number of taxpayers is decreasing. This means that the future state pension will be so small that it just will not suffice.
Three pension pillars. What are they?
1st pillar: state pension paid by the state. 20% of funds are derived from social tax which your employer pays the state and which the Pension Board divides among the present pensioners.
2nd pillar: pension scheme, to which you contribute individually in cooperation with the state. As an employee, you direct 2% of your gross wages to personalised pension account, to which the state adds 4% of your current social tax payments. Your pension is made dependant on the contributions made to the scheme during your employment.
3rd pillar: voluntary pension schemes. Gives you a sense of security that at pensionable age you can maintain your developed living standard. You make individual contributions according to your possibilities and needs. The state supports you with income tax incentives.