29.05.2026
A Norstat survey commissioned by LHV shows that 68% of Estonian residents consider it important for the assets in their second-pillar pension fund to be managed with active risk oversight.
Active risk management is considered most important among people aged 30–39, at 76%, and those aged 50–59, at 72%, while the figure exceeded 60% across all age groups. According to Vahur Vallistu, Chairman of the Management Board of LHV Asset Management, the situation is paradoxical. “Although a large proportion of Estonian residents want active risk management for their second-pillar pension assets, the number of clients in index funds has grown particularly strongly in recent years. Yet an index fund is a fully automated process in which the fund manager’s role is limited to a few mouse clicks, and no active management of risks or investments takes place,” Vallistu explained.
According to Vallistu, the gap between trends in the Estonian pension fund market and the survey findings points to a lack of awareness among the public. More specifically, many people may not realise that the investment approach of index funds involves taking on 100% market risk. “It is likely that a number of second-pillar investors mistakenly believe that risks are also actively managed in index funds, although this is not the case,” Vallistu said.
He added that raising awareness is important so that people can make informed decisions aligned with their actual risk appetite. In the future, the average state pension in Estonia is expected to amount to barely one third of the average salary, meaning personal responsibility for building a financial buffer will increase. “To support informed decision-making when choosing a second-pillar fund, and to maintain motivation to save over the long term, we need to speak honestly and transparently about more than just fees. This also includes explaining how risks are managed in different funds,” Vallistu said.
The issue forms part of a broader problem. The survey also found that nearly two thirds, or 62%, of Estonian residents do not know whether they are saving in the second pillar through an index fund or an actively managed fund. Among people aged 40 and over, more than 70% were unable to say. “A lack of awareness creates a risk that people may spend many years saving in a second-pillar fund that does not best align with their investment principles,” Vallistu noted. He emphasised that for many people in Estonia, the second pillar is one of their most important long-term financial safeguards. For this reason, people should take an active interest in their choices, their fund’s investment strategy, and its long-term performance.
According to Vallistu, expectations for active risk management tend to increase particularly during periods of uncertainty in the external environment. Based on the survey findings, he pointed out that international conflicts, such as the war in Ukraine and tensions in the Middle East, are affecting people’s investment decisions. “The survey showed that 44% of Estonian residents feel more uncertain than before. It is precisely during turbulent times that people’s desire to see their assets actively managed becomes stronger,” Vallistu said.
LHV pension funds are managed by AS LHV Varahaldus. Please refer to the prospectus and key information available at https://www.lhv.ee/en/second-pillar, and seek guidance from a professional. Past performance is not a promise or indication of future performance. The value of invested capital is not guaranteed. The average return for the period is presented as the annualized geometric mean return.
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