TALLINN – The Isamaa party group in the Riigikogu has sent a letter to Bank of Estonia governor Madis Muller, asking for an analysis of the effect of the second pillar of the pension system on the Estonian economy to date as well as on current pensions.
Priit Sibul, chair of the Isamaa group, said the statements that the Bank of Estonia has made so far suggest that it has only looked at the effects of making the second pillar optional, rather than the pension system as a whole.
"The Isamaa group estimates that the pension system analysis needs to be refined in its entirety. The Bank of Estonia should assess how the withdrawal of approximately four billion euros from the Estonian economy has affected our economic growth and the salary levels of the Estonian people," Sibul wrote in the letter cited by the English-language news portal of public broadcaster ERR.
"We cannot ignore the fact that the creation of the second pension pillar in the early 2000s coincided with tens of thousands of young people leaving Estonia. The previous decision to create a second pension pillar also affects today's retirees," he said.
The letter also proposed analyzing potential risks which could affect the Estonian economy and second pillar pension funds over the coming decades.
The Estonian Cabinet in August endorsed proposals by the minister of finance for the reform of the second pillar of the pension system, or mandatory contributions by working people into a pension fund of their choice, whereby joining and leaving the second pillar would be made voluntary.
The reform is to take effect next year.
When the reform takes effect, joining and leaving the second pillar pension fund will become voluntary. To join or exit the fund, a corresponding application must be submitted to the Pension Center or a bank. Payments into the second pillar can be stopped while the funds accumulated in the fund will continue to be invested. Payments into the fund can also be stopped along with the whole sum being withdrawn. Those who wish to invest their savings themselves will have the opportunity to have their funds transferred into an investment account.