Vahur Vallistu: ‘A good way to increase your savings rate is by increasing your contributions to the II pension pillar!’

‘Increasing your personal contribution to 4% or 6% gives even more leverage to the growth of asset value,’ said Vahur Vallistu, Chairman of the Management Board at LHV Varahaldus. To date, more than 58,500 people have made the choice to increase their II pillar contribution, most of whom have decided on 6%, i.e., the solution that will increase their future pension the most.

A Norstat survey revealed that people in Estonia see the change as a good opportunity to increase their savings rate. In addition, the opportunity to contribute more than before when saving for retirement is highly valued. ‘Changes are often accompanied by a paradox between attitudes and behaviours. The Estonian people are positively inclined towards innovation. It takes time to get acquainted with the opportunity that has arisen, and it is important to make a carefully considered choice, as financial decisions related to the II pillar have a long-term impact,’ Vallistu said.

He stressed that the II pillar is the most important safety net for many Estonian people to provide security for the future. ‘Increasing contributions is one of the most effective decisions to make to increase the peace of mind of yourself and your loved ones,’ Vallistu emphasises. All the more so since the average amount of pension assets accumulated in the II pillar today is less than EUR 10,000. ‘Whether this is a little or a lot in a situation where, on average, people still live at retirement age for almost 18 years is up to each individual’s decision. However, it is clear that every additional euro you have saved and invested will help in the future. It is recommended to plan your retirement in such a way that when you retire, you spend 70–80% of your current income. Last year, the average state pension accounted for 38% of the average gross salary in Estonia, i.e., the gap is double. This gap can only be narrowed by contributing to independent savings,’ Vallistu said.

You can increase your II pillar contributions until 30 November in your home bank or on the website www.pensionikeskus.ee. Payments according to the new request will start moving from January 2025. An application to change the contribution rate can also be made after 30 November, but then the new rate will only apply from 2026.