Estonia has from Wednesday, July 1, stopped state payments into the second pillar of the pension system until September 2021, explaining the move with the economic effects of the COVID-19 pandemic.
Officials have noted that the move will save it EUR 350 million over a two-year period, and was necessitated by the economic fallout from the coronavirus pandemic.
ERR explained, however, that the state is effectively borrowing EUR 350 million from second-pillar pension members, and the money is to be reimbursed in 2023-2024. This would only be in full for those tax payers, who continue to make their second pillar contributions for the length of this period.
From October 2020, individual taxpayers in Estonia will be able to apply to suspend their payments that make up 2% of their gross earnings. The state’s portion is 4%. The state’s payment will be withheld by August 31, 2021.