How to start contributing agan into the second pillar in Estonia? Some ideas are...

Delfi Ärileht addresses the issue where many people who have left the second pillar of the Estonian pension system want to start contributing again, but the current 10-year restriction prevents this. A survey conducted among Tuleva Funds AS members revealed that a significant portion of those who had withdrawn their funds consider this restriction unfair. The Minister of Finance Jürgen Ligi proposed shortening the restriction period, and although it is not mentioned in the new government's coalition agreement, it is hoped that the proposal will be discussed during coalition negotiations.

Currently, individuals who have withdrawn money from the second pillar can only rejoin after 10 years, but a reduction of this period to five years is being considered. According to a survey among Tuleva members who had withdrawn their funds, the majority support shortening the rejoining period, citing three main reasons.

Firstly, people should have the freedom to decide what to do with their money. If the right to use the assets of the second pillar has been created, there should also be the right to save in it without long restrictions. Many respondents emphasized that saving for retirement should be voluntary, and there should be no obstacles to joining or leaving.

Secondly, allowing faster rejoining would benefit both the state and society. The current time restriction did not significantly impact people's decisions to leave, but it prevents them from starting to save again and securing their future. Respondents felt that 10 years is too long. They argued that if people could save for their pensions themselves, it would be more beneficial for the state, as the state would not have to support them with benefits later.

Thirdly, the mindset of those who left the second pillar has changed. Many individuals who withdrew their funds regret their decision or used the money out of necessity and now want to start saving again. They have realized that investing on their own is not always easy, and the returns may not be good.

In addition, concerns were raised about potential unequal treatment upon rejoining. There are fears that under new conditions, the state may no longer direct 4% of social tax to the second pillar for those rejoining, which is considered an unfair punishment for a past decision. Therefore, rejoining should be allowed under the previous conditions to maintain trust in the pension system.

Broad conclusions cannot be drawn from 150 responses, but there are several strong arguments in favor of allowing rejoining. The reasons for restricting rejoining during the second pillar reform have proven inadequate. There is also no risk of people frequently moving in and out of the second pillar if the restriction is shortened, as the law only allows starting contributions twice in a lifetime.

The main obstacle to shortening the 10-year restriction is money. If people start saving again, 4% of social tax would again go to the second pillar, which would reduce the state's tax revenue. The restriction postpones this cost, but hopefully this will not be the decisive factor in coalition negotiations.

Source: Delfi Ärileht