20.02.2026
The study commissioned by LHV and conducted by Norstat has revealed that Estonians’ savings have decreased in recent years. As a result, a large part of the population plans to use this year’s income tax refund to cover everyday expenses. Twenty-six per cent of survey participants plan to save money, contribute to their third pension pillar, or invest in some other way.
‘It is clear that the daily lives of the Estonian people have become more fragile in the face of economic headwinds,’ commented Nelli Janson, Head of the LHV Investor Community, on the results of the study. However, saving money for a rainy day shows that having a peace of mind fund and consciously planning for the future is considered important in an uncertain economic environment. ‘Investing the extra money generated by the income tax refund or the abolition of the tax ‘hump’ allows you to build a stronger financial foundation. A financial buffer helps to cope with unexpected events and provides reassurance,’ said Janson.
According to Vahur Vallistu, Chairman of the Management Board of LHV Asset Management, the cornerstone of strong financial health is saving in the second and third pillars. They offer automated investment opportunities with tax incentives, which the Estonian people are using more and more actively. Today, more than 112,000 people have increased their personal contribution to the second pillar to 4% or 6%. At the same time, close to 188,000 3rd pillar pension accounts have been opened, into which at least one contribution has been made,’ Vallistu explained. He stressed that the income tax refund is, however, a one-off cash injection. Consistency and regular attention to your own finances will bring a long-term result. ‘Both the 2nd and 3rd pillars are exempt from income tax when saved in on a long-term basis. In the 2nd pillar, monthly contributions are made automatically and invisibly from your salary, and investments made in the 3rd pillar are exempt from income tax, which means that every euro invested has already gained 22 cents,’ said Vallistu, explaining why the 3rd pillar is one of the most attractive investment products. In his opinion, there is a noticeable trend that every year more and more people are investing their income tax refunds in the 3rd pillar.
Of those who participated in the survey, 45% responded that their savings and investments had decreased over the last three years. Growth was noted by 26% of respondents, while 18% of respondents had never had savings or investments. There were significant differences between age groups. Thus, among 18–29-year-olds, the majority have seen their savings and investments grow (42%), while among 40–59-year-olds, savings have decreased for every second person. ‘This clearly reflects the impact of price increases and the general economic environment on households’ financial security. It is also a sign that conscious financial planning is more important than ever,’ Janson noted.
The survey also shows that age has a significant impact on how people plan to use their income tax refund. For example, 44% of respondents aged 18–29 plan to save or invest their money, which is the highest percentage among all age groups. In contrast, 30–39-year-olds are more likely than others to invest their money in the 3rd pillar. In turn, people aged 50–59 use their income tax refund more often than people in other age groups to cover everyday expenses.
According to Janson, it is quite positive that a significant proportion of younger people use their income tax refunds for saving and investing. ‘Based on the survey, young adults are the most active in this area. This indicates that financial literacy and long-term planning are gaining ground among the younger generation,’ he said. Janson also reiterated the basic principle of investing: the earlier you start, the better result you will achieve over the long term.
Last year’s income tax returns can be filed from 16 February to 30 April. The refund for overpaid income tax will begin on 5 March.
Check out LHV’s third pillar funds here
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