Growing number of Estonians switch pension funds

  • 2004-11-10
  • From wire reports
TALLINN - As many as 31,831 Estonian residents have taken advantage of the opportunity to switch pension funds this year, figures from the Central Securities Depository show.
Of the people who joined a second-pillar pension fund before the Oct. 31 deadline, 2,197 swapped their acquired pension shares for a different fund. And, according to CSD spokespeople, this number will increase in the near future.

"Since a very large percentage of the target group has joined a pension fund already, advertising campaigns in the coming years will focus on swapping funds. It means that by the end of 2005, a larger number of shareholders will have most likely changed their preference. Yet the number of people swapping funds is likely to make up just a fraction of the number joining a pension fund - it's a long-term investment where the price of today's decision will be seen only when one retires," said CSD manager Kaidi Oone.

According to estimates, the amount of money that has reached pension funds will total more than 4 billion kroons (256 million euros) by the end of 2005, compared with more than 2 billion kroons today. By Oct. 31 of this year, as many as 423,612 residents had joined a mandatory pension fund, while the number of new entrants reached 72,945. The respective number was 207,200 in 2002 and 144,000 in 2003.

Since many people joined a pension fund during previous periods, the number of new entrants this year was smaller, said Oone, adding that, during the entire accession period, new pension fund agreements were signed at a record-even rate.

Pension funds, which keep up to 50 percent of their assets in stocks, are the most popular, and were chosen by 71.43 percent of those residents joining a second-pillar pension fund. In comparison, 18.23 percent chose a fund that places up to a quarter of their assets in stocks, while 10.35 percent opted for a fund investing exclusively in bonds.

Hansapank funds had the biggest customer-market share with 52.89 percent of clients at the end of October, followed by Uhispank's pension funds with 28.89 percent and Sampo Pank with 11.73 percent. EBGO had a market share of 3.2 percent, LHV had 2.25 percent and Seesam, 1.04 percent.