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 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 31.07.2018)14,989,212.65 €

Price of a unit

Management companyLHV Varahaldus

Rate of the depository’s charge0,06%

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 31.07.2018.

Biggest investments
EfTEN Kinnisvarafond5.82%
East Capital Baltic Property Fund III3.04%
East Capital Baltic Property Fund II2.70%
Citadele banka 12/20262.63%
iShares DAX EX2.58%
PKO Bank Polski 01/20192.09%
JP Morgan Chase 08/20212.06%
Wells Fargo & Company 07/20212.03%
Total Capital Intl 03/20202.01%
SAP 03/20212.01%
Current asset allocation
Money and deposits12.30%
Government bonds8.07%
Corporate bonds36.56%
Real estate12.84%
Shares30.23%
Regional distribution
Money and deposits12.30%
The Baltic states38.90%
Europe (excl. the Baltic states)32.71%
Asia4.29%
North America10.45%
Other1.35%

Global securities markets moved in a positive direction in July

Romet Enok, Fund Manager

After several anxious months, July turned out to be a predominantly positive month for global stock markets. The stock exchanges of the United States, Japan and the majority of European countries showed good results. For example, the German stock exchange index rose in July by 3.6% and the Finnish stock exchange showed a somewhat more restrained rate of return of 1%. The only stock exchange in the Baltic Republics to record a positive return in July was the Vilnius exchange, which rose by 1%. The Tallinn Stock Exchange fell by 0.2% and the Riga stock market index by 2.9%. Investments in Swiss pharmaceutical manufacturer Roche and German car maker Daimler had a positive effect on the rate of return for the pension fund, rising over the month by 12.3% and 4.8%, respectively. Finnish forestry companies Stora Enso and Metsä Board had a negative effect, with their shares falling on the Helsinki Stock Exchange by 8.4% and 6.7%, respectively. On the other hand, investments in Finnish companies Neste and Nokian Renkaat provided the pension fund with a rate of return of 7.7% and 11.1%, respectively.

Inherent to the improved risk appetite the shares of lower rated corporate bonds rose along with stock markets, while government bonds fell at the same time. Measured from the start of the year, the situation is the opposite – the only market segment in positive territory is government bonds. Although even in their case, the win was modest, as expected. In place of the large markets of the Euro Zone we are continuing to focus on alternatives, having acquired Lithuanian Energy 10 year bonds in July, which had raised capital from the market, at an interest rate of 1.875%.

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 31.07.2018)1,996,527.86 €

Price of a unit

Management companyLHV Varahaldus

Rate of the depository’s charge0,06%

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 31.07.2018.

Biggest investments
iShares Core MSCI World UCITS16.35%
db x-trackers MSCI Emerging Markets Index UCITS14.92%
db x-trackers MSCI USA Index UCITS ETF9.34%
Schwab International Equity ETF7.09%
db x-trackers MSCI World Index UCITS ETF6.05%
Vanguard Total World Stock ETF5.80%
iShares Edge MSCI Min Vol Global ETF5.49%
Vanguard FTSE Emerging Markets ETF5.06%
iShares Core MSCI Emerging Markets ETF4.62%
Vanguard FTSE All-World UCITS ETF4.06%
Current asset allocation
Money and deposits0.76%
Shares99.27%
Regional distribution
Money and deposits0.76%
Emerging Markets31.93%
Frontier Markets3.55%
Developed Markets63.79%

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

The world's stock markets continue to direct us towards the local market
Andres Viisemann, Head of LHV Pension Funds

The new publicly traded company, Port of Tallinn, had its first trading day in June and is the first company with the state's qualifying holding on the Tallinn stock exchange in almost 20 years. The initial public offering of the shares was successful and interest in share purchase was strong: the offered shares were almost three times over-allotted. In addition to LHV pension funds, the investors included many local and foreign institutions and more than 13,000 retail investors.

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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