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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 EUR 6000 per year. For instance, if you invest EUR 100, you will receive an income tax refund of EUR 20 next March.

III pillar funds

LHV Pension Fund Intress Pluss
  • Low risk level.
  • Suitable for risk averse pension savers with little experience in investing in financial markets, with at least 2 years remaining until retirement.
Buy units

Strategy
In the selection of the fund’s investments, low risk and preservation of value is preferred over a potential high yield. The fund’s assets are predominantly invested in debt securities and deposits at credit institutions. The fund does not invest in shares or other equity instruments.

Expenses

Entry fee 0% / Exit fee 1% / Management fee 0.95%

Information about the fund

Volume of the fund (as of 31.12.2017)544,027.49 €

Price of a unit

Management companyLHV Varahaldus

AS SEB Pank

The data is presented as at 31.12.2017

Biggest investments
Tartu Linnavalitsus 10/20325.91%
Lithuania 05/20224.63%
IBM Corporation 11/20203.88%
Lithuania 02/20233.25%
Romania 10/20253.20%
Korea (Republic of) 12/20213.19%
Elering 07/20182.88%
Apple 11/20222.86%
China Development Bank 01/20222.61%
JP Morgan Chase 08/20212.14%
Current asset allocation
Money and deposits58.9%
Government bonds17.0%
Corporate bonds24.1%
Regional distribution
Money and deposits58.9%
The Baltic states20.1%
Europe (excl. the Baltic states)4.2%
Asia5.8%
North America11.0%
LHV Supplementary Pension Fund
  • 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.
Buy units

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 31.12.2017)14,085,949.05 €

Price of a unit

Management companyLHV Varahaldus

AS 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 31.12.2017.

Biggest investments
EfTEN Kinnisvarafond6.21%
Citadele banka 12/20262.78%
East Capital Baltic Property Fund II2.71%
Tallink Grupp2.40%
PKO Bank Polski 01/20192.27%
Volkswagen Intl FIN NV 03/20192.13%
JP Morgan Chase 08/20212.11%
Wells Fargo & Company 07/20212.10%
United Parcel Service 07/20202.01%
Tallinna Kaubamaja1.98%
Current asset allocation
Money and deposits25.1%
Government bonds8.0%
Corporate bonds29.1%
Real estate9.5%
Shares28.3%
Regional distribution
Money and deposits25.1%
The Baltic states33.7%
Europe (excl. the Baltic states)25.7%
Asia4.5%
North America9.2%
Other1.8%

The result was supported by the rise in the stocks of Neste and Roche

Romet Enok, Portfolio Manager

Once again, November appeared to be positive for the Japanese stock market, where the Tokyo Stock Exchange rose by 3.2% in local currency and by 2.2% measured in euros. On European stock markets, however, November was a month with a negative rate of return: the stock markets in Germany, France, Sweden, Finland as well as Great Britain were all in a state of decline. The level of stock index, including the 50 largest European companies, altogether dropped 2.8% by the end of the month.

The best result in the Baltics was achieved in November by the Riga Stock Exchange index with a 3% increase. The Tallinn Stock Exchange index rose by 1.8% in November, partly due to the biggest listed company, Tallink. The shipping company reported very strong quarterly results and the stock rose by 7.6% in a month.

Also, the PRFoods stock demonstrated a good return on the Tallinn stock exchange with its 3.5% rise. In addition, the 9.3% upsurge in the stock price of Finnish oil company Neste and 7% increase of that of the Swiss pharmaceutical company Roche had a positive impact on the rate of return of the pension fund.

November passed without any bigger movements on the European bond markets. Government bonds offered a slightly positive and corporate bonds a minor negative rate of return.

In November, we fully sold the fund’s biggest investment outside the Baltics – the Bulgarian government bonds. While at the time of their issue and the acquisition of our position in summer 2014, the state’s reputation was still strongly associated with the financial crisis, for now, Bulgaria is close to becoming a member of the euro zone. The declined risk level brought along a notable price increase of bonds and thus, the rate of return of the investment rose slightly over 26% in three and a half years.

From new investments, the Citadel bank bonds were added to the portfolio. Likewise to the issue last winter, this time the biggest investors in the bank’s subordinated bond issue were also LHV’s pension funds. While the annual interest of bonds issued last December is 6.25%, this offer was at the interest level of 5.5%.

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 Pension Fund 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.
Buy units

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 31.12.2017)1,491,009.59 €

Price of a unit

Management companyLHV Varahaldus

AS 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 31.12.2017.

Biggest investments
db x-trackers MSCI USA Index UCITS ETF7.98%
db x-trackers MSCI World Index UCITS ETF7.62%
Vanguard Total World Stock ETF7.48%
iShares Edge MSCI Min Vol Global ETF7.07%
db x-trackers MSCI Emerging Markets Index UCITS7.02%
iShares Core MSCI World UCITS6.97%
Schwab International Equity ETF6.95%
Vanguard FTSE Emerging Markets ETF6.93%
iShares Core MSCI Emerging Markets ETF6.36%
Schwab Emerging Markets Equity ETF5.47%
Current asset allocation
Money and deposits5.1%
Shares94.9%
Regional distribution
Money and deposits5.1%
Emerging Markets30.3%
Frontier Markets3.4%
Developed Markets61.2%

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.

The third pillar is flexible and easy to start

1.

Open a securities account
You need to have a securities account at the Estonian Central Register of Securities to invest in the third pillar.

2.

Add money to your account
Add money to your account to buy units of the third pillar.

3.

Make a standing payment order
You can see your third pillar units in your third pillar statement within two banking days.

Market overview of pension funds

New investments in Estonia
Andres Viisemann, Head of LHV Pension Funds

November was a relatively quiet month for securities markets. Stock markets in the US and Japan recorded small rises, while European shares lost 2.1% of their value. The value of shares traded on the Tallinn Stock Exchange grew in November by 1.8%.

Benefits of III pillar

Hele Kõrve

LHV pensionikoguja

“Kokkuvõtlikult on pensioni valimisel kolm asja olulised – fondi tootlus, risk ja sinu enda vanus. Mina olen 36-aastane ja soovin koguda pensionifondi, millel on võimalikult kõrge pikaajaline tootlus. Tootlus mõjutab pensionivara suurust.“

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
Sign up for a consultation