Analytics, Estonia, Financial Services, Pensioners

The results of the survey indicated that around 50% of the respondents did now know that those who leave the second pillar will not be able to rejoin it until 10 years later. A mere one-fifth of the respondents were aware of this.

"The results of the survey raise concerns because awareness of the planned restructuring is lacking, particularly among economically vulnerable target groups. The awareness is higher among people with higher education, position and income. Young people aged 18-24 are the least informed about the reform," Kati Voomets, head of the Institute of Finances, said. 

Voomets noted that the people who intend to withdraw their money funds from the second pillar fund most often plan to invest it in real estate or transfer it onto a savings or holding account. 

"The plan to invest in real estate was significantly more popular among people aged 24-34. A quarter of the respondents would use the money to repay a loan or debt and roughly as many would use it for purchases or travel," she said.

Altogether 60% of the respondents were aware about the income tax payable upon withdrawing the savings, and 54% also knew that they will be able to continue saving up for retirement on their own through an investment account.

Of the respondents, 38% knew that they would have the option to stop payments to the second pillar fund, and 36% knew they may end up moving up an income tax bracket if they withdraw their savings. 29% also knew that if they had not previously joined the second pillar fund, the reform would now allow for them to do so.

Altogether 35% of the respondents want to continue accumulating savings in the second pillar fund, 20% plan to withdraw their money and seven percent intend to go on saving on their own via an investment account. 35 percent have yet to decide how they will proceed when the pension reform takes effect as in their opinion, they do no have enough information to make that decision.

Among those who plan to continue investing on their own, just 12% said that they have sufficient experience for doing so. Around one-fourth of of people in this segment said that they have limited investment experience, and 43% said that they have the knowledge required but no prior investment experience.

Approximately 50% of the respondents said that they plan to continue working when they reach retirement age to ensure adequate income. 30 percent are counting on the second pillar fund in this context and roughly as many are planning to use their savings and deposits. Just 17% hope that they will be supported by their children.

The survey uncovered that the residents' biggest concern is that the inflation will erode their savings and there won't be enough of it for them to retire, Voomets said.

"The second pillar funds' rate of return has actually exceeded inflation 82%  of the time. The funds accumulated in the second pillar will serve as a crucial contribution to our pension in the future; however, supplementary savings are also undoubtedly needed," Voomets said.

The pension survey commissioned by the Swedbank Institute for Finances was carried out by pollster Turu-uuringute AS among 740 people aged 18-65 in November and December last year.