The Estonian pension system is divided between three different pillars:

1st pillar – state pensions. State pension insurance guarantees an income for people when they retire or in the event of their becoming incapacitated or losing their provider. State pensions are paid out from the social tax calculated on salaries.

Two types of pensions are paid in Estonia: those which depend on work contribution ( old-age pension,  pension for incapacity for work and  survivor’s pension) and the  minimum or national pension. There are a further two classes of old-age pension: the  early-retirement pension and the  deferred old-age pension.

2nd pillar – funded pensions.  Funded pensions are based on pre-financing – people produce their own pension by paying 2% of their gross salary into a pension fund. To this amount the state then adds 4% of the 33% social tax calculated on the worker’s salary.

3rd pillar – supplementary funded pensions.  Supplementary funded pensions are additional voluntary pensions which enable you to save more and maintain your standard of living during your retirement.

The government sets specific rules for the three-pillar system, administering the 1st pillar, guaranteeing the 2nd pillar and providing an effective supervision and regulation system for both the 2nd and 3rd pillars. Employers make contributions (through the national social tax) to the 1st pillar. Employees make mandatory payments into the 2nd pillar and are free to choose whether to contribute to the 3rd pillar.

 Social Insurance Board