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Amendments to the I pillar pension

Under the auspices of the Ministry of Social Affairs and with the help of stakeholders, the old-age pension paid under the State Pension Insurance Act was renewed to ensure its viability for years to come.

The main objective of state pension insurance is to provide people with an adequate income for their retirement. The amount of the pension is set by the financial capacity of the state, which in turn depends substantially on the number of people of working age and the social tax paid by them.

According to forecasts, the population of Estonia will decrease from 1.31 million to 1.11 million by 2060. The number of people aged 18–63 will decrease by 256,000, or 32%. The number of people over 63 will increase by 106,000 people, or 41%.

The forecast ratio of worker to pensioner shows that while there have been an average of more than two employees per old-age pensioner in the last 20 years, the number will fall below 1.3 by 2060. Life expectancy continues to increase and therefore, without raising the retirement age, the retirement period will also increase. Such a development would lead to a reduction in pensions, meaning that the matter needs to be addressed today.

The planning of changes began with an analysis of the sustainability of the state old-age pension in the spring of 2015. Experts from universities contributed to the preparation of the analysis. During the same year, several meetings with social partners and other stakeholders took place to discuss the main objectives of pension insurance and the analysis carried out. The analysis was completed in 2016. In November 2016, the conference “Pension 2050” was organised in cooperation with the Estonian Cooperation Assembly.

On the basis of the analysis compiled, amendments to the State Pension Insurance Act were developed. The Riigikogu adopted the amendments on 12 December 2018.

Changes in the I pillar pension:

In 2021, the pension will become more flexible. People will be able to choose the most suitable time for their retirement, partially withdraw their pension or stop payment of their pension if they wish, in effect creating their own personal pension plan.

From 2021, the formula for the state old-age pension will be upgraded – starting in 2021, we will start collecting the so-called joint part. The person will retain their current insurance components and length of service, these will not be converted. The person will have a full relationship with the amount of their wages through the second and third pillars. Take a closer look.

Starting in 2027, retirement age calculations will be based on the life expectancy of 65-year-olds. The pension system will thus be in line with demographic developments and, as the population declines, it will be possible to pay pensions equivalent to the current one. With the aid of the calculator at you can see your estimated retirement age and pension amount.

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Last updated: 05.09.2022