11.09.2026
The pension investment account, or PIK, is part of the second pillar system and an alternative to pension funds, which allows assets to be grown as you see fit and enables independent investment decisions. Residents of Estonia have already opened a total of 10,000 pension investment accounts, where more than EUR 150 million is growing.
According to Vahur Vallistu, Chairman of the Management Board at LHV Varahaldus, the PIK is a possible alternative primarily for second pillar investors who save in index funds, i.e. consider low fees to be the most important. ‘Investing in an index fund is a fully automated process that is easy to set up. Saving one’s second pillar in an index fund through a pension investment account eliminates the need to pay the fund manager for a few clicks and allows the investor to keep more money in their pocket’, Vallistu said.
The opportunity to accumulate one’s second pillar through a pension investment account resulted from the 2021 pension reform. Over the past five years, the number of people opting for the PIK has been steadily increasing. According to Vallistu, on the one hand, Estonian residents have become more aware that this is a part of the second pillar system and not a separate investment product. People’s financial literacy has also improved, and an increasing number of individuals wish to take the reins when building their own future financial security. ‘In particular, we see this trend for those who are already accumulating their second pillar in some index funds. If a person wishes to invest passively and as cheaply as possible, for example, in the global stock markets, the PIK may be one of the possible solutions to be explored more closely,’ Vallistu noted.
Today’s PIK investor often takes 100% equity risk through investing in index funds. The proportion of available funds in pension investment accounts is decreasing, and investment confidence is increasing. For example, the share of free finances in LHV’s PIK portfolios has dropped below 20%. This shows that PIK investors are putting capital to work for their own future.
According to Vallistu, a common misconception persists that managing one’s own pension investments through a PIK requires extensive knowledge of stock markets and various asset classes. ‘In fact, the PIK is accessible to anyone with basic knowledge of investing, independent decision-making, and investment-related risks. At the same time, it is also possible to build the investment process through simpler strategies, for example, by using regular and automated investments in index funds’, Vallistu explained.
Once your homework is done, you can easily set up monthly automatic investments and create a portfolio that is very similar to the popular index funds offered on the Estonian pension market. However, the associated fees may be lower, as there are no management fees for the fund manager. ‘Given that nearly 200,000 people currently invest their second-pillar pension savings in index funds through pension funds, the number of PIK account holders could grow significantly in the future’, Vallistu said. He emphasised, however, that a PIK offers the opportunity to also add individual shares and other asset classes to the portfolio, and that it is worth doing thorough research before making any investment decisions.
Although the decision regarding the second pillar can be changed constantly, it is an important financial decision. The second pillar is the main financial asset for many people in Estonia, which is why it is important to choose a solution that suits your risk appetite for growing money in the second pillar. ‘Constantly chasing trends does not usually bring success’, Vallistu concluded.
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The financial service provider is AS LHV Pank. Learn more about the terms and risks at lhv.ee and ask our expert for advice.
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