TALLINN - While Estonia's kids were tidying up their Halloween costumes early in the evening on Oct. 31, their parents - born 1957-1961 - were standing in lines at bank offices for the last chance to take advantage of the second pillar of the country's pension reform In order to accommodate the last-minute rush, some of Hansabank's branch offices were open until midnight last week, while Eesti Uhispank's main office remained open until late evening.
Already a total of 351,193 people, about 144,000 during the last 12 months, have joined the country's second pillar of pension reform - also known as the 2+4 pension plan.
As of Nov. 3 Uhispank had a total of 107,909 clients who had joined the plan, Evelyn Pull, spokeswoman for Eesti Uhispank, said. And almost half of them joined the system during the last period, from Nov. 1, 2002 to Oct. 31, 2003.
"The second pillar pension agreements were signed very actively during the last week. People always do so; they consider the offer and make a decision at the last moment," said Pull, adding that the bank would no longer organize a major advertising campaign but would focus on servicing clients' money under management.
Pull said people would join the second pillar pension every year because they already understood it was useful.
Hansabank's pension funds hold about 50 percent of the Estonian market, while Uhispank's pension funds have nearly 31 percent.
Sampo Bank boasts a 13 percent market share.
Estonia's pension reform uses a three-pillar system that divides pensions into three parts: a state-funded retirement pension, payments from personal pension packages (partly sponsored by the state, the 2+4 system) and money from individual private pension funds.
Joining the second pillar pension is voluntary for people born before 1983. The interest rates earned from this plan are quite modest since the state limits the level of risk these funds can take.
The third pillar of voluntary pension packages offers more risky, and potentially more profitable, investment alternatives.
According to the Finance Ministry, the government could face additional difficulties in connection with the coalition's promise to keep the minimum pension at 40 percent of the salary of an unskilled male worker, the level recommended by the European Social Charter.
As the coalition cuts the personal income tax from 26 percent to 24 percent next year and raises the tax-free salary minimum, pensions should grow as well.