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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
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View the current state of your pension

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.
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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 31.08.2017)535,282.24 €

Price of a unit

Management companyLHV Varahaldus

Danske Bank A/S Eesti filiaal

The data is presented as at 31.08.2017

Biggest investments
Lithuania 05/20224.70%
Bulgaria 09/20244.34%
IBM Corporation 11/20204.02%
Korea (Republic of) 12/20213.37%
Romania 10/20253.29%
Lithuania 02/20233.28%
Apple 11/20222.94%
Elering 07/20182.93%
China Development Bank 01/20222.71%
JP Morgan Chase 08/20212.22%
Current asset allocation
Money and deposits57.5%
Government bonds21.7%
Corporate bonds20.8%
Regional distribution
Money and deposits57.5%
The Baltic states16.3%
Europe (excl. the Baltic states)8.7%
Asia6.1%
North America11.4%
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.
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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 31.08.2017)13,993,102.93 €

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 31.08.2017.

Biggest investments
EfTEN Kinnisvarafond6.34%
East Capital Baltic Property Fund II3.80%
Citadele banka 12/20262.72%
Bulgaria 09/20242.54%
PKO Bank Polski 01/20192.29%
Tallink Grupp2.21%
JP Morgan Chase 08/20212.16%
Wells Fargo & Company 07/20212.15%
Tallinna Kaubamaja2.12%
Lithuania 11/20241.97%
Current asset allocation
Money and deposits27.9%
Government bonds10.7%
Corporate bonds22.3%
Real estate10.7%
Shares28.4%
Regional distribution
Money and deposits27.9%
The Baltic states35.5%
Europe (excl. the Baltic states)23.0%
Asia4.4%
North America7.3%
Other1.8%

Developed markets and Baltic exchanges enjoyed excellent momentum in July

Romet Enok, Portfolio Manager

July mainly brought slightly negative rates of return to the stock markets of developed nations. The majority of stock markets in European countries were on the negative side along with the US and Japanese share indexes when measured in euros. However, developing markets enjoyed a generally positive month in terms of rates of return – good results were achieved by several Latin American and Eastern European exchanges. In the Baltics, stock exchanges in Riga and Vilnius rose by 2 per cent and 4.8 per cent respectively, although the strongest performer during the month was the Tallinn Stock exchange, rising by 8.3 per cent.

In July, the investment in the shares of shipping company Tallink, which rose by 22 per cent in light of a new large investor being found, had an additional positive impact on the rate of return of the pension fund. Shares of Grindeks, the Latvian manufacturer of medicinal products, continued at an excellent pace, rising by nearly 8 per cent in July and 87 per cent over the current year.

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.
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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 31.08.2017)1,079,254.61 €

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 31.08.2017.

Biggest investments
db x-trackers MSCI World Index UCITS ETF9.82%
Vanguard Total World Stock ETF9.82%
iShares Edge MSCI Min Vol Global ETF9.55%
Vanguard FTSE Emerging Markets ETF9.37%
iShares Core MSCI World UCITS9.00%
iShares Core MSCI Emerging Markets ETF8.46%
Vanguard FTSE All-World UCITS ETF8.06%
Schwab Emerging Markets Equity ETF7.41%
iShares MSCI ACWI ETF7.15%
Vanguard FTSE Emerging Markets UCITS ETF6.03%
Current asset allocation
Money and deposits1.7%
Shares98.3%
Regional distribution
Money and deposits1.7%
Emerging Markets31.3%
Frontier Markets3.2%
Developed Markets63.8%

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

viisemann avatar

Investments in the Estonian economy for the benefit of the pension fund investors

Andres Viisemann, Head of LHV Pension Funds

July was a relaxed month for securities markets. After the moderate rise that took place in the first half of the year, stock markets have lost their steam. The majority of the larger stock markets were slightly negative in July. European shares fell by 0.6% and North American shares lost 1.2% of their value when measured in euros.

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
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