25.08.2026
More than 120,000 people in Estonia have already chosen to increase their personal contribution to the II pension pillar from 2% to either 4% or 6% of their gross salary.
According to Vahur Vallistu, the Chairman of the Management Board of LHV Varahaldus, financial literacy is becoming an increasingly integral part of people’s everyday financial decisions in Estonia. ‘The continued growth in the number of people choosing to contribute more to their II pillar pension, together with the strong popularity of the III pillar, are good examples of this trend. Both offer tax-efficient ways to build an investment portfolio, and when investing, it makes sense to take advantage of these opportunities first,’ he said.
The overall dynamics of the II pillar market have also changed. In the first years following the pension reform, more people left the II pillar than joined it. Today, the situation has reversed. ‘The net growth in the number of II pillar investors reflects people’s growing willingness to take greater responsibility for their financial future and their appreciation of automated wealth-building solutions. The II pillar works by helping people build long-term financial security through the principle of effortless saving,’ Vallistu noted.
For example, a 25-year-old earning Estonia’s average gross monthly salary of 2,200 euros would accumulate approximately 246,000 euros by retirement through a 2% contribution rate, assuming an average annual nominal return of 3.9% for II pillar pension funds (since 2002) and average annual wage growth of 3% (based on the Ministry of Finance’s long-term forecast). Increasing the contribution rate to 6% would raise the accumulated amount to approximately 410,000 euros.
The option to increase personal II pillar contributions to 4% or 6% of gross salary became available in 2024. That year, 74,000 people in Estonia took advantage of the opportunity, followed by 33,000 last year. This year, almost 14,000 people have already submitted an application to increase their II pillar contributions.
Interest in increasing the II pillar contribution rates typically accelerates as the 30 November deadline approaches. Payments will be processed in accordance with the new request from 1 January. According to Vallistu, previous years have shown that anyone who has decided to increase their personal contribution should not leave the application until the last minute. ‘Unfortunately, every year there are people who accidentally miss the deadline, meaning they forgo both the additional pension contributions and the associated tax benefit for the entire following year,’ he said.
If necessary, the decision can be changed and the application withdrawn until 30 November. It is also possible to change the contribution rate of the II pillar in the following years, meaning that a person always has the freedom of choice. However, it should be borne in mind that the contribution rate chosen as of 30 November will apply throughout the following year.
You can increase your II pillar contribution through your home bank or on the website at www.pensionikeskus.ee.
LHV pension funds are managed by AS LHV Varahaldus. Please refer to the prospectus and key information available at 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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