The Riigikogu in Estonia has adopted the Act on Amendments to the Funded Pensions Act and Taxation Act, aiming to strengthen the second pillar pension system.

The amendments, which were initiated by the government, enable people who left the second pillar to rejoin after five years instead of the previous 10.

For example, those who left the pillar in 2021 or 2022 will be able to apply to have their contributions reinstated after the changes come into force.

Another amendment related to the early withdrawal of pension savings, with people now able to withdraw portions of their money from the second pillar before retirement age, rather than having to withdraw all their savings in one go.

After a partial withdrawal, people will also be able to start contributing to the second pillar again after five years.

“However, the rule will be changed so that if a person has already used the opportunity to withdraw money from the second pillar before retirement age and joins again later, they will continue to save money until retirement,” Luminor explained.

“Rejoining the second pillar will remain voluntary and the conditions for retirement will not change: you can retire from the second pillar five years before retirement age or in the event of loss of work capacity.”

The changes will come into force from 1 November 2026, while the partial withdrawal of funds and resumption of accumulation without restrictions after the suspension of payments will take effect from 1 January 2028.

Furthermore, if the social tax going into the second pillar pension is reduced, the amendment to the law must be adopted and there must be at least five years left until it enters into force.

For example, if the rate going into the second pillar of pensions is 4 per cent and the Riigikogu decides to reduce it to 3 per cent, this change would come into effect at least five years after the adoption of the change.

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