Mandatory Funded Pension | Max-Planck-Institut für Sozialrecht und Sozialpolitik - MPISOC

Mandatory Funded Pension

Kohustuslik kogumispension

1 As of 01/01/2021, the mandatory participation has been turned into a voluntary participation for all age groups, meaning that persons can stop making contributions to the previously mandatory funded pension scheme and instead pay the whole amount of the mandatory pension contributions (20%) to the statutory old age pension scheme. In case people decide to cease their participation, they have three options: (1) leave the accumulated capital in the scheme; (2) transfer the accumulated capital to a pension investment account; (3) withdraw the accumulated capital in total as a lump sum.

2 Due to the economic downturn caused by COVID-19, as of July 2020 the state has suspended the payment of the 4% of the mandatory contributions for 1 year. The suspended payments will resume in 2023 for all participants in the scheme.

Legal Basis: Funded Pensions Act  (Kogumispensionide seadus);  Taxation Act  (Maksukorralduse seadus); Income Tax Act (Tulumaksuseadus).