Over 423,000 people have joined the funded pension system
Over 423,000 people had joined the funded pension system by the end of the fourth subscribing period
According to final data, 423,612 persons had joined the funded pension system by 31 October 2004. During the fourth subscribing period 72,945 initial subscriptions were received. The new subscribers will make their first contribution on 1 January 2005. The Estonian CSD (ECSD) expects more people to switch between funds in the forthcoming years.
“As a very large number of people have already subscribed during earlier periods, the overall subscribing activity was less intensive than in the previous years and spread more evenly over the period than ever before,” said Kaidi Oone, the managing director of ECSD in her comment. While new subscriptions reached the peak at 207,200 in 2002, about 144,000 and 72,945 new subscriptions were made in 2003 and 2004, respectively.
This was the first subscribing period when subscribers were able to exchange their pension fund units for another fund’s units. 2197 persons used this opportunity. The minimum required for an exchange was 500 units of a fund. Contributions to a new fund were possible as before, in which case the existing units remained in the former fund. During this period 31,831 persons applied for making contributions to another fund.
The forthcoming year 2005 is already the fourth year of funded pension contributions. This means that the yield of the funds can be used more and more as a criterion for the choice of a fund. “As a very large part of the target group have already subscribed, the advertising campaigns of the future years will stake on changing the fund. This means that by the end of 2005, probably a larger number of unit holders will have changed their choice of fund, compared to this year. But fund changers will probably form only a small percentage of all subscribers – it is a long-term investment where the price of today’s decision will only be revealed at retirement,” Kaidi Oone added. She also expects that pension funds will exceed the EEK 4 billion threshold by the end of 2005.
The age structure of subscribers is in favour of mandatory subscribers – those born in 1983 and later (18.66% of all subscribers). They are followed by people born in 1957–61 (13.31%), who had the last chance to join the system on 31 October 2003. This year was the last year of joining for people born in 1962–64 (8.91% of all subscribers).
50% share funds continued to be the most popular among the subscribers. About three-fourths (71.43%) have chosen an aggressive strategy; 18.23% have opted for a balanced strategy and 10.35% of the subscribers preferred a debentures fund.
Statistics on the market shares of the funds, the age and sex structure of the subscribers and their fund preferences as of the end of the fourth subscribing period are presented below.
Estonian CSD maintains the Estonian Central Register of Securities, including the accounts of funded pension transactions.