The Estonian government has published its plans for pension reform, which involve removing the mandatory status of the second pillar.

According to Estonian broadcaster ERR, the bill enacting the changes is unlikely to be passed until after Christmas, missing the government’s planned timeline.

Coalition government party Isamaa’s chairman Helir-Valdor Seeder said the government still planned to implement the changes from the second half next year, ERR reported.

However, the opposition Social Democratic Party’s (SDE) chairman Indrek Saar hit back at the plans, arguing that they did not answer fundamental questions about the impact of the changes.

The planned reforms involve Estonia’s second-pillar system becoming voluntary, while the level of the state pension will be increased. Those with savings in the second pillar will be able to suspend contributions and transfer out to a personal investment account.

Quoted by ERR, Saar accused the government of wanting to “get the consumption party started, not knowing what the mass abandoning of the second pillar will mean in the long run for our pension system and economy, as well as for our people and the future of Estonia”.

He added: “The Estonian state is not a casino. It is our duty to build a strong, safe and sustainable state for future generations as well, rather than make decisions at their expense.”

The SDE supports pension system reform, according to ERR, but opposes the dismantling of the system entirely.

Estonia’s central bank and the International Monetary Fund have both warned that the system overhaul could mean lower pensions for future generations of retirees and have advised against the dismantling of the second pillar.

The changes were put forward as part of an agreement struck in April between the three parties making up Estonia’s governing coalition.

Estonia’s pension system posted an average investment loss of 5.5 per cent in 2018, according to the OECD, while the annualised average performance over 15 years to the end of 2017 was -0.2 per cent.

At the same time, management fees remain among the highest in the OECD’s member countries.

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