Pension Reform 2021
Payments before reaching pensionable age
If you have not reached pensionable age and you are more than five years away from pensionable age, you can still submit an application for withdrawing the money from the second pillar of the funded pension.
In this case, the pension fund units will be redeemed and the corresponding amount (in future, also the fund on the pension investment accounts) will be transferred to your current account. 20% income tax will be withheld from the disbursement (Since 01.01.2025 income tax is 22%).
Application for withdrawal of money
If the application is submitted:
- from 1 December to 31 March, the disbursement will be made in September;
- from 1 April to 31 July, the disbursement will be made in January;
- from 1 August to 30 November, the disbursement will be made in May.
Withdrawal of funds will terminate contributions to second pillar.
Contributions will be terminated as of the first day of the month of disbursement, e.g. as of 1 September, if the application was submitted before 1 April.
On “My pension account” you’ll need to sign digitally the application with PIN2 of your ID-card.
The application is subject to a fee. The fees may differ in banks.
You’ll need to make an Estonian bank account payment to submit the application on the “My pension account”.
Cancellation of the application for withdrawing second pillar funds
Up until one month before the realisation of the application for withdrawal of funds, it is possible to cancel the application by submitting a corresponding cancellation application.
For example, a withdrawal application submitted up to 31 March 2022 can be cancelled until 31 July 2022.
The cancellation application can be submitted at bank branches and the Pension Centre’s self-service environment under “My pension account”.
Open “Cancel the application for withdrawal of funds” (Avalduse tühistamise avaldus) and in the specific data, select “Application for withdrawal of funds” (Raha väljavõtmise avaldus), sign the application digitally and confirm the application.
Withdrawal of funds from the pension investment account
If you have accumulated financial assets via a pension investment account, the financial assets must be transferred, the contracts concluded during the accumulation of the assets terminated and the funds received from the transfer transferred to the pension investment account by the time of submitting the application.
Funds can be withdrawn from the funded pension twice in your life
For the second time, you will have the right to demand withdrawal of all pension fund units and disbursement of the funds from the pension investment accounts,
- if you have decided to resume contributions after 10 years have passed since the first withdrawal and
- have made the new contributions for at least 10 years.
Example of taxation:
