III pillar

Investment in the future on which the state refunds the income tax

  • Ensure your future through the third pillar
  • A wise monthly investment
  • The state refunds the income tax on the investment
Income tax incentive

The state refunds the income tax on the money invested in a third pillar pension fund. The allowance applies to payments that represent up to 15% of your gross income, but not in excess of 6000 € per year. For instance, if you invest 100 €, you will receive an income tax refund of 20 € next March.

III pillar funds

LHV Täiendav Pensionifond
  • Medium risk level.
  • Suitable for pension savers aware of investment risks, who wish to make long-term investments in a supplementary funded pension, with the aim of using the accumulated money after reaching the age of 55.
Strategy

The fund makes significant investments in equity markets: to ensure maximum growth, the proportion of equity markets is kept close to 75% of the value of the fund’s assets. The proportion of equity markets may also be higher – up to 95% – or lower (in recent years close to 40%), if considered reasonable by the fund manager.

Expenses

Entry fee 0% / Exit fee 1% / Management fee 1%.

Information about the fund

Volume of the fund (as of 31.12.2018)14,891,758.47 €

Price of a unit

Management companyLHV Varahaldus

Rate of the depository’s charge0.0588%

DepositoryAS SEB Pank

We will allocate your money into international enterprises, the development of which we believe in. At the same time, it must be taken into consideration that the future of these enterprises depends on both their internal decisions as well as the changes in the global economy.

The data is presented as at 31.12.2018.

Biggest investments
EfTEN Kinnisvarafond5.60%
Luminor Bank 10/20214.03%
East Capital Baltic Property Fund III3.10%
iShares DAX EX3.06%
East Capital Baltic Property Fund II2.70%
Citadele banka 12/20262.63%
JP Morgan Chase 08/20212.13%
Wells Fargo & Company 07/20212.11%
PKO Bank Polski 01/20192.10%
Total Capital Intl 03/20202.02%
Current asset allocation
Money and deposits6.80%
Government bonds8.03%
Corporate bonds42.26%
Real estate13.10%
Shares29.81%
Regional distribution
Money and deposits6.80%
The Baltic states41.05%
Europe (excl. the Baltic states)36.10%
Asia4.08%
North America11.63%
Other0.34%

The world's bond markets recovered in November, the Tallinn Stock Exchange offered great surprises

Romet Enok, Fund Manager

November in the world's stock markets was quite modest compared to October and there were no major increases or decreases in the stock exchanges of developed countries. The Japanese stock exchange index, measured in the local currency, increased by 2%. The stock markets of larger European markets mostly saw a slight decrease. For example, the stock exchange indices of Germany, France and Finland decreased by 1.7%, 1.8% and 3.1% respectively.

The index of developing stock markets rose by 4.1%, while the increase was led by Asian countries, especially China. In the Baltics, the Tallinn Stock Exchange showed the best rate of return with a 3.9% increase in November. The Riga Stock Exchange index rose by 0.3% in a month and the stock market of Vilnius decreased by 1.2%.

The great results of Tallinn Stock Exchange were assisted by the shipping company Tallink; its shares rose by 17% in a month. The company's shares were listed on the Helsinki Stock Exchange and in addition there is a plan to increase the dividend payment and make a payment for investors by increasing the share capital.

The reduction of the Vilnius Stock Exchange was largely caused by the travel agent Novaturas as its shares decreased by 18% in a month. The company reported an increase in revenue, which was lower than expected, in the third quarter and the profit margins decreased. The shares of the Lithuanian clothing company Apranga also decreased by 6% because the growth speed of the company is weak and the rate of return is also lower than expected.

Nelja Energia announced in the bond portfolio that the new owner of Eesti Energia has decided to pay back the bonds of Nelja Energia prematurely. We purchased the bonds in the summer of 2015 and we have earnt an interest of 6.5% per year from them. In addition, the company pays a premium of 4% for the funds of the company for the premature redemption of bonds.

November was a difficult month in international bond markets where the only winners were government bonds. On the contrary, loaning money is still getting more expensive for companies. The bond market of companies with the lowest credit rate in Europe had the biggest fall; the price loss was almost 2% in a month.

Pension agreement

The state does not tax payments from the 3rd pension pillar if you have concluded an insurance contract under which regular pension payments will be made to you for the rest of your life.

See more at Pensionikeskus.ee

Resale of shares

Fund shares can always be sold, in which case income tax applies. After turning 55, but not before five years have passed from the initial investment, disbursements are taxed a rate of 10%.

The third pillar savings can also be bequeathed

The heir can then decide what to do with the inherited assets—whether to transfer them to their account or to withdraw the amount in cash.
Income tax of 20% applies to cash withdrawals.

LHV Pensionifond Indeks Pluss
  • High risk level.
  • Suitable for investors with a high risk tolerance, who are prepared to tolerate the risks arising from potentially significant fluctuations in equity markets. Investing in the fund assumes previous investment experience.
Strategy

The fund invests all of its assets in equity markets and the fund manager does not actively change the fund’s risk level. The fund’s assets are invested in index-following investment funds. The share of funds investing in equities is kept close to 100% of the fund’s volume. Whenever the share of money exceeds 2% of the fund’s volume, the free money is invested at least in the amount exceeding 2%, within five banking days.

Expenses

Entry fee 0% / Exit fee 0% / Management fee 0,39%.

Information about the fund

Volume of the fund (as of 31.12.2018)2,082,178.76 €

Price of a unit

Management companyLHV Varahaldus

Rate of the depository’s charge0.0588%

DepositoryAS SEB Pank

We invest the assets of the fund in index-following investment funds. We keep the share of funds investing in equities close to 100% of the fund’s volume. Whenever the share of money exceeds 2% of the fund’s volume, we invest the free money, at least in the amount exceeding 2%, within five banking days.

No particular indices are followed in investing the assets of the fund. Investments in investment funds investing in equities are distributed between three types of markets – developed markets, emerging markets and frontier markets – based on their approximate share in global gross domestic product (GDP).

The data is presented as at 31.12.2018.

Biggest investments
Lyxor Core MSCI World DR UCITS27.31%
db x-trackers MSCI Emerging Markets Index UCITS26.99%
iShares Core MSCI World UCITS26.91%
db x-trackers MSCI World Index UCITS ETF6.80%
Vanguard FTSE Emerging Markets UCITS ETF4.21%
iShares MSCI Frontier 100 ETF2.25%
Current asset allocation
Money and deposits5.55%
Shares94.47%
Regional distribution
Money and deposits5.55%
Emerging Markets31.20%
Frontier Markets2.25%
Developed Markets61.02%

Pension agreement

The state does not tax payments from the 3rd pension pillar if you have concluded an insurance contract under which regular pension payments will be made to you for the rest of your life.

See more at Pensionikeskus.ee

Resale of shares

Fund shares can always be sold, in which case income tax applies. After turning 55, but not before five years have passed from the initial investment, disbursements are taxed a rate of 10%.

The third pillar savings can also be bequeathed

The heir can then decide what to do with the inherited assets—whether to transfer them to their account or to withdraw the amount in cash.
Income tax of 20% applies to cash withdrawals.

Market overview of pension funds

New ways must be found to grow money
Andres Viisemann, Head of LHV Pension Funds

Although the major stock markets remained slightly upside in November, the overall mood was rather nervous. Investors sense that good times do not last forever and the current increase in stock prices has been one of the longest ones in history. However, markets will not decline just because the increase has been going on for too long. In general, this is still due to the fact that the price level of assets has increased faster than justified by the economic environment.

Ask for advice

Do not hesitate to ask, together we will find a suitable solution.

Reet Roos
Pension Consultant
Mon–Fri 8–17
680 2743
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