18.12.2025
Investing in the III pillar is becoming increasingly popular among Estonians. A recent Norstat survey commissioned by LHV shows that 65% of III pillar account holders contribute up to 1,000 euros per year.
According to Pensionikeskus, the number of III pillar accounts is growing rapidly. At the end of 2020, there were 120,000 III pillar pension accounts with at least one deposit, while today, that number has risen to 184,000. This reflects more than a 50% increase over five years.
Vahur Vallistu, Chairman of the Management Board at LHV Varahaldus, notes that the growing popularity of the III pillar reflects increasing awareness among people. ‘The I pillar, or state pension, already does not provide sufficient income or financial security for many Estonians. Considering demographic trends, the situation is unlikely to improve in the future and may, in fact, worsen,’ Vallistu explained. Fortunately, more and more Estonians recognise that, in addition to the state pension, they need to save money themselves to secure their financial future. ‘People can take significant steps to shape their retirement income. Consistent, automated contributions to the III pillar, which also offer tax benefits, are one of the best ways to do this,’ Vallistu said.
The Norstat survey, conducted in early December on behalf of LHV, found that 26% of Estonians currently have a III pillar account. Of these, 17% contribute regularly, while 9% contribute according to their ability. The survey also revealed that 10% of respondents would like to open a III pillar account but lack the financial means. Meanwhile, 42% do not have a III pillar account and, at present, do not plan to open one.
Vallistu emphasised that saving for retirement and building a financial buffer can start with small amounts. ‘The important thing is to take the first step, be consistent, and develop a habit of saving and investing. It is also wise to start contributing to the III pillar as early as possible so that your money can work for you over the long term,’ he added. The Norstat survey found that 65% of contributors invest up to 1,000 euros annually, 20% invest between 1,000 and 2,000 euros, and 15% contribute more than 2,000 euros.
One of the main advantages of the III pillar is that contributions are tax-free. Contributions benefit from a 22% income tax relief for deposits made during the year, up to 15% of gross income or 6,000 euros. ‘For every euro invested in the III pillar, you can get 0.22 euros back when filing your tax return,’ explained Vallistu. This makes the III pillar one of the most attractive investment products on which to build a financial foundation.
The survey also found that half of respondents (51%) are aware of the tax refund benefits of the III pillar, while 49% are not. ‘This shows that it is important to continue raising awareness,’ Vallistu noted.
To benefit from the tax refund on contributions made this year, the final deposit should be made on 29 December, by noon. Contributions to the III pillar can be conveniently made through your bank’s online banking service.
Check out LHV's third pillar funds here
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