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.
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 31.05.2018)14,840,917.26 €

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 31.05.2018.

Biggest investments
EfTEN Kinnisvarafond5.80%
East Capital Baltic Property Fund III3.00%
East Capital Baltic Property Fund II2.75%
Citadele banka 12/20262.71%
iShares DAX EX2.56%
PKO Bank Polski 01/20192.11%
JP Morgan Chase 08/20212.09%
Wells Fargo & Company 07/20212.07%
Total Capital Intl 03/20202.03%
SAP 03/20212.03%
Current asset allocation
Money and deposits11.90%
Government bonds8.14%
Corporate bonds37.59%
Real estate12.84%
Shares29.53%
Regional distribution
Money and deposits11.90%
The Baltic states38.73%
Europe (excl. the Baltic states)32.95%
Asia4.42%
North America10.64%
Other1.36%

The performance of the fund was driven by Finnish equities and the portfolio of local corporate bonds

Romet Enok, Fund Manager

After several months of unrest, April was predominantly a month of positive yields for global equity markets. For instance, the Japanese stock exchange index, measured in the local currency, increased by 4.7% and the German stock market index – by 4.3%. However, Turkish and Russian equity markets ended with a negative yield, both down by 9.3% and 7.4%, respectively. As for Baltic equity markets, the only one to demonstrate a positive yield in April was the Vilnius stock exchange with a 0.3% increase. The stock exchange indices of Tallinn and Riga dropped by 1.3% and 0.7%, respectively. In March, Olympic Entertainment Group, listed on the Tallinn stock exchange, received a takeover offer from Odyssey Europe. The share price offered to shareholders was similar to the then stock exchange price. After long deliberations, we decided to accept the offer and in April we sold all the shares of Olympic owned by the pension fund.

In April, we added a large local bond investment to the portfolio when the real estate fund Baltic Horizon, listed on the Tallinn stock exchange, raised funds by issuing bonds for investment and bank loan refinancing purposes. Funds were raised for five terms and repayment shall be in bulk upon maturity. The bonds are not connected with or secured by any specific buildings owned by the fund and the loan will be paid out of the rent generated from all their properties. Such flexibility means that the company can pay higher interests compared to bank loans, i.e., 4.25% a year in this case. April was rather poor on the European bond markets: corporate bonds remained barely above zero and government bonds depreciated by 0.4%.

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.
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 31.05.2018)1,882,492.11 €

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 31.05.2018.

Biggest investments
iShares Core MSCI World UCITS15.64%
db x-trackers MSCI Emerging Markets Index UCITS12.89%
db x-trackers MSCI USA Index UCITS ETF9.57%
Schwab International Equity ETF7.48%
db x-trackers MSCI World Index UCITS ETF6.25%
Vanguard Total World Stock ETF6.08%
iShares Edge MSCI Min Vol Global ETF5.71%
Vanguard FTSE Emerging Markets ETF5.47%
iShares Core MSCI Emerging Markets ETF5.04%
Schwab Emerging Markets Equity ETF4.30%
Current asset allocation
Money and deposits0.77%
Shares99.24%
Regional distribution
Money and deposits0.77%
Emerging Markets31.22%
Frontier Markets3.09%
Developed Markets64.93%

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

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

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

  • 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

LHV focuses its investments on companies with growth potential
Andres Viisemann, Head of LHV Pension Funds

After a relatively turbulent beginning of the year, April brought a mainly positive performance on international stock markets. From the largest markets, the Japanese and European stock markets had the best results with their respective increase of 4.7% and 4.6% in local currencies.

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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