Investments into the third pension pillar increased
Investments into the supplementary funded pension (III pillar) funds reached a record last year, with the volume of funds increasing from MEEK 343 to BEEK 1.1 in the year.
In addition to the growth of funds, the number of the clients of supplementary funded pension increased from the 25 107 at the end of 2006 to more than 42 000 investors at the end of 2007. By funds, Hansa Pension Fund V3 has the most clients for a supplementary funded pension. The number of clients joining the Hansa Pension Fund V3 has doubled every year. If at the end of 2006, Hansa Pension Fund V3 had 11 000 unit holders, then by the end of 2007, the number had increased to 21 000. In terms of the number of unit holders, the Pension Fund Active of SEB Ühispank is second (8 363 unit holders).
“On the basis of the statistics of the Estonian Central Securities Depository, it is great to note that the investment activity of people in Estonia continues to increase. Again, great attention is being paid to long-term investments and ensuring one’s old age. As a majority of the working-age population has already joined the mandatory funded pension, the transactions related to changing the second pillar funds became more frequent last year. Investments into voluntary or third pillar pension funds showed continuous growth in 2007 – the number of volunteers investing into pension funds increased in both 2006 and 2007 by about 70% when compared to the previous period,” said Kristel Johanson, Managing Director of the Estonian Central Securities Depository.
The number of people who joined the mandatory funded pension (II pillar) increased from 519 726 people to 554 353 in 2007. The total volume of the funds of mandatory funded pension increased from BEEK 7.5 to BEEK 11 last year. The EPI index, which reflects the average rate of return of funded pension funds, increased by 5.6% in 2007 – from 145.67 points to 154.32 points.
At the turn of the year, the persons who had expressed a wish to collect their mandatory funded pension into a new fund were able to do so and transfer the funds collected so far into the new fund as well. Last year, 42 902 investors directed their deposits into a new fund (35 129 in 2006) and 13 000 investors exchanged units (8 152 in 2006). Hansa Pension Fund K3 was the most popular among people changing their pension fund.
The mandatory pension fund Hansa Pension Fund K 3 has the most investors – 218 330 (192 057 at the beginning of 2007). It is followed by SEB Progressive Pension Fund with 143 814 investors, while the LHV Quality Funds Pension Fund has the fewest investors (756).
As of 2007, it is possible for the heirs of persons who have joined mandatory funded pension to sell the inherited units back to pension funds and take the estate out in cash. This option was used by 812 people in 2007. The average sum taken out of pension funds as an inheritance was EEK 8 700 in 2007.
As of 2008, a restriction is valid, when taking out the estate in cash, for the heirs who have joined II pillar: it is possible to do so only within one year as of the receipt of the notarial succession certificate. After the passage of this period, the units of the pension fund can be transferred to one’s own pension account. The heirs who have not joined the II pillar can still take the estate out in cash within ten years.
More information on the funded pension is available on the Pension Centre’s homepage: www.pensionikeskus.ee The Estonian Central Securities Depository keeps account of persons who have joined the funded pension.