Estonia, Financial Services, Pensioners

The analysis of the suspension of pension payments during the economic crisis at the turn of the last decade confirmed that the continuation of pension payments after the crisis brought the investor a third higher pension income, SEB said.

According to the bank, it may not be reasonable to suspend contributions during the downturn in the financial markets, because by buying cheaper, it is possible to earn more when the markets recover.

SEB also noted that if the planned pension reform enters into force, the disbursement restrictions will almost completely disappear. This will make the second pillar a very attractive and state-subsidized investment and it would be smart to make the most of it.

In the second quarter of this year, the average gross monthly salary in Estonia was 1,433 euros. If the average wage earner suspends contributions to the second pillar, it will help save 23 euros in one month and 207 euros in nine months.

If the average wage earner decides to continue making payments, in nine months, they will set aside approximately 774 euros for the future with the support of the state.

SEB's spring customer survey showed that 75 percent plan to continue second-pillar contributions and 15% to suspend them. Based on this, approximately 105,000 people in Estonia would suspend payments, which would result in a minus of some 60 mln euros for the average wage pension collectors, the bank said.