etru

II pillar

LHV pension funds have the highest 10-year rate of return¹

As retirement age approaches, the pension fund should involve lower risk. When choosing your second pension pillar, keep in mind two important things:

  • how much time you have left until retirement
  • what level of risk you are willing to take
Join the II pension pillar

View the current state of your pension

II pillar funds

LHV Pension Fund XS – The safest choice

Suitable if

  • you have less than 3 years left until retirement,
  • you have low risk tolerance,
  • your aim is to preserve your savings and avoid losses.
Join the fund

Strategy
We invest the money into the bonds of various governments and their affiliated organisations. They offer the greatest stability and the lowest risks. There is no stock market risk. The money accumulated for your pension remains stable.

Rate of return

From the beginning/ Current year/ Current month

Expenses

Entry fee 0% / Exit fee 0% / Management fee 0,62802%

Information about the fund

Volume of the fund (as of 31.07.2017)20,708,347.15 €

Price of a unit

Management companyLHV Varahaldus

Equity in the fund110 000 units

Rate of the depositary’s charge0,06% (paid by LHV)

Depositary where the fund’s assets are heldAS 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 31.07.2017

Biggest investments
France 05/20276.81%
Czech Republic 05/20224.59%
Transpordi Varahaldus 04/20254.48%
Riigi Kinnisvara 06/20274.36%
Temasek Financial 03/20224.25%
Lithuania 09/20173.95%
Slovakia 11/20243.90%
Elering 07/20183.70%
Amber Circle Funding 12/20222.75%
Latvenergo 05/20202.15%
Current asset allocation
Money and deposits39.2%
Government bonds28.0%
Corporate bonds32.8%
Regional distribution
Money and deposits39.2%
The Baltic states26.9%
Europe (excl. the Baltic states)20.7%
Asia9.0%
Other4.3%

The fund avoids risk-free bonds that continue to be at the risk of interest rate increase

Romet Enok, portfellihaldur

The summer started on the government bond market in sombre mood when investors interpreted the speech of the President of the European Central Bank as meaning that the bank may soon put an end to support measures on financial markets. The German bond market responded strongest. Since the beginning of the year, the German bond market has demonstrated a 2% decline. That said, the 10-year risk-free interest rate barely reached the same level that has already been achieved three times this year. In other words, the decline is not significant yet. We are avoiding risk-free bonds that continue to be at the risk of interest rate increase. Instead, we are increasing the share of other asset classes in the portfolio. State-owned commercial undertakings Riigi Kinnisvara and Transpordi Varahaldus started to use the first part of the capital raised from bonds. This meant that Riigi Kinnisvara became the fund’s second largest individual investment, right behind the bonds of the government of the Czech Republic. As a result of the requirements applicable to pension funds, we acquired French government bonds after the previously mentioned transactions, with a view to keeping the proportion of bonds with a high rating. At the end of the month, the fund also bought shorter bonds of the Development Bank of Japan within the fund’s liquidity management exercise. As interest rates rose, the fund ended the month of June at -0.3%. The Development Bank of China and Qatar, with their bonds emitted in dollars, had the most serious implications on the result.

The type of disbursement depends on how much you have accumulated in the fund. The type of payments can be predicted with the concept of the national pension rate, the sum of which is established on the basis of an annually set index. Since April 2017 the sum is EUR 175.94.

How can the funds be withdrawn from the second pillar?

See video

Pension agreement: when more than 50 times the national pension rate has been accumulated

The main option of withdrawing the money accumulated in the 2nd pillar fund is to conclude a pension agreement. This means that upon retirement you conclude an agreement with a life insurance company, handing the funds accumulated in the pension fund over to the disposal of the company. In return, the insurance company will pay you a regular pension until the end of your life. This is important information, as insurance companies are making estimations about the duration of the pension age and calculate the sum of the disbursements made to you. If you live a healthy life and to an old age, the insurance company will make payments to you in a larger amount than the one accumulated in the fund. Otherwise, the insurance company keeps some of the money and uses it to make payments to clients who live to an older age.

Funded pension: when up to 50 times the national pension rate has been accumulated

When up to EUR 9000 has been accumulated in the pension account, the money can be used with periodical payments from the pension fund. For this, an application must be filled in at a bank office or the online bank. In your application, notify the bank of the desired period of the payments and the total duration of the pension payments. How short the period can be is determined by the Funded Pensions Act and depends on the age of the pensioner. Unlike an insurance company, which pays you a pension for the rest of your life, payments from the pension fund are only made as long as there is money on your account. On the other hand, all of the assets in the fund belong to the recipient of the pension, and when they pass away, they are transferred to their heirs.

In a lump sum: when up to 10 times the national pension rate has been accumulated

Money can be withdrawn from the 2nd pension pillar in a lump sum, when less than EUR 1800 have been accumulated in the pension fund.

Bequeathing

The assets of the pension fund can be bequeathed. Heirs are free to choose whether to withdraw the amount at once or to inherit fund shares. An income tax of 20% applies to the cash payments.

Taxes

An income tax of 20% applies to the payments from the pension fund. The income tax calculation is based on the tax exemption to the monthly income of a pensioner, which in 2017 is EUR 416.

LHV Pension Fund S – A safe choice

Suitable if

  • you have less than 3 years left until retirement,
  • you have low risk tolerance,
  • your aim is the preservation and modest growth of your pension savings.
Join the fund

Strategy
We invest your money into strong corporate bonds. They offer stability in the maintenance of your money and are not affected as much by the prevalent economic situation as corporate shares. There is no stock market risk. The growth of your pension savings is limited, but will be stable.

Rate of return

From the beginning/ Current year/ Current month

Expenses

Entry fee 0% / Exit fee 0% / Management fee 0,79800%

Information about the fund

Volume of the fund (as of 31.07.2017)64,442,190,56 €

Price of a unit

Management companyLHV Varahaldus

Equity in the fund270 000 units

Rate of the depositary’s charge0,06% (paid by LHV)

Depositary where the fund’s assets are heldAS 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 31.07.2017

Biggest investments
Transpordi Varahaldus 04/20254.56%
Temasek Financial 03/20224.14%
Latvenergo 06/20224.05%
Slovakia 11/20243.96%
Investor 05/20233.25%
Latvia 09/20252.92%
Romania 10/20242.56%
Amber Circle Funding 12/20222.55%
Elering 07/20182.54%
UniCredit Bank 10/20202.50%
Current asset allocation
Money and deposits28.3%
Government bonds21.3%
Corporate bonds50.3%
Regional distribution
Money and deposits28.3%
The Baltic states23.8%
Europe (excl. the Baltic states)30.4%
Asia7.1%
North America5.4%
Other5.0%

The volume of positions of companies owned by the government of Estonia is increasing

Romet Enok, Portfolio Manager

The main events on the European bond market in June were once again affected by the speech of the President of the European Central Bank, in which he emphasised the strength of the European economy and questioned the need for support measures used to date. This message was followed by an almost half a per cent fall on both government and corporate bond markets.

Nevertheless, risk-free interests continue to be either at a negative or very low level. Furthermore, the pricing of bonds of liquid companies is currently clearly at a (too) high level. Therefore, we continue to avoid buying longer euro bonds on international financial markets. Instead, we are increasing the share of other asset classes in the fund portfolio. Today, state-owned commercial undertakings Riigi Kinnisvara and Transpordi Varahaldus have started to use the first part of the capital raised from bonds. When the entire contracted capital is taken up (in the second half of the year), both positions will become the largest investments of the fund. Due to the depreciation of longer bonds and appreciation of the euro towards the dollar, the result of the fund in June was -0.4%; the Development Bank of China, JP Morgan and Wells Fargo, with their dollar emissions, had the largest impact on the result.

The type of disbursement depends on how much you have accumulated in the fund. The type of payments can be predicted with the concept of the national pension rate, the sum of which is established on the basis of an annually set index. Since April 2017 the sum is EUR 175.94.

How can the funds be withdrawn from the second pillar?

See video

Pension agreement: when more than 50 times the national pension rate has been accumulated

The main option of withdrawing the money accumulated in the 2nd pillar fund is to conclude a pension agreement. This means that upon retirement you conclude an agreement with a life insurance company, handing the funds accumulated in the pension fund over to the disposal of the company. In return, the insurance company will pay you a regular pension until the end of your life. This is important information, as insurance companies are making estimations about the duration of the pension age and calculate the sum of the disbursements made to you. If you live a healthy life and to an old age, the insurance company will make payments to you in a larger amount than the one accumulated in the fund. Otherwise, the insurance company keeps some of the money and uses it to make payments to clients who live to an older age.

Funded pension: when up to 50 times the national pension rate has been accumulated

When up to EUR 9000 has been accumulated in the pension account, the money can be used with periodical payments from the pension fund. For this, an application must be filled in at a bank office or the online bank. In your application, notify the bank of the desired period of the payments and the total duration of the pension payments. How short the period can be is determined by the Funded Pensions Act and depends on the age of the pensioner. Unlike an insurance company, which pays you a pension for the rest of your life, payments from the pension fund are only made as long as there is money on your account. On the other hand, all of the assets in the fund belong to the recipient of the pension, and when they pass away, they are transferred to their heirs.

In a lump sum: when up to 10 times the national pension rate has been accumulated

Money can be withdrawn from the 2nd pension pillar in a lump sum, when less than EUR 1800 have been accumulated in the pension fund.

Bequeathing

The assets of the pension fund can be bequeathed. Heirs are free to choose whether to withdraw the amount at once or to inherit fund shares. An income tax of 20% applies to the cash payments.

Taxes

An income tax of 20% applies to the payments from the pension fund. The income tax calculation is based on the tax exemption to the monthly income of a pensioner, which in 2017 is EUR 416.

LHV Pension Fund M - A balanced choice

Suitable if

  • you have more than 3–10 years left until retirement age,
  • you have moderate risk tolerance
  • the aim is the long-term stable growth of your pension savings.
Join the fund

Strategy
We allocate most of the funds into bonds, which offer stability when it comes to the preservation of your money. For added balance, we also invest into real estate and enterprises to allow for stable growth by your pension savings. Up to 25% of the fund’s assets will be allocated to shares, that is, holdings in companies will be acquired. We invest the rest into bonds and real estate.

Rate of return

From the beginning/ Current year/ Current month

Expenses

Entry fee 0% / Exit fee 0% / Management fee 1,06400%

Information about the fund

Volume of the fund (as of 31.07.2017)87,856,410.98 €

Price of a unit

Management companyLHV Varahaldus

Equity in the fund380 000 units

Rate of the depositary’s charge0,06% (paid by LHV)

Depositary where the fund’s assets are heldAS 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 31.07.2017

Biggest investments
EfTEN Kinnisvarafond5.15%
Transpordi Varahaldus 04/20254.28%
Latvia 01/20213.44%
Bulgaria 09/20243.37%
East Capital Baltic Property Fund II2.72%
Autolist 04/20222.71%
Latvenergo 06/20222.58%
Citadele banka 12/20262.41%
Lithuania 11/20242.24%
Latvia 09/20252.17%
Current asset allocation
Money and deposits21.8%
Government bonds17.4%
Corporate bonds43.7%
Real estate9.2%
Shares7.9%
Regional distribution
Money and deposits21.8%
The Baltic states45.2%
Europe (excl. the Baltic states)17.2%
Asia3.3%
North America10.1%
Other1.3%

June was weak on global equity and bond markets, Baltic stock exchanges ended on the plus side

Romet Enok, Portfolio Manager

June was predominantly a weak month for European equity markets and the stock market indices of most countries ended up with a negative result. However, in the Baltic states the Vilnius and Tallinn stock exchanges grew by 0.8% and 1.8%, respectively. The strongest grower was the stock market index of Riga – 14% –, mainly thanks to the shipping company Latvijas Kugnieciba (Lasco). The Dutch energy company Vitol increased their holding in Lasco to 71% and are thus required to make takeover bids to other shareholders. Vitol has set the bid price at EUR 0.71 per share, which is 58% higher than the most recent stock exchange price. Due to premature refunding of bonds, the fund’s almost five-year investment in the Estonian IT company Nortal came to an end. The yield of the investment was 15% per year.

June was a weak month for bonds. While the market managed to withstand yet another interest rate increase by the Federal Reserve, the speech given by the President of the European Central Bank regarding the strong economy of the continent shocked a lot of investors. A stronger economy means that the ECB will withdraw their support measures, which poses a risk to bond prices. In the wake of the speech, both corporate and government bonds ended the month with a decline of almost half a per cent. Excess “air” in the prices of global bonds is one of the reasons as to why we continue to avoid purchases of long bonds on financial markets and focus on other opportunities on the local market. Last month, state-owned commercial undertakings Riigi Kinnisvara and Transpordi Varahaldus started to use the first part of the capital raised from bonds. As the limits will be fully taken up in the second half of the year, both positions will be among the largest investments of the fund. In the second half of the month, the fund acquired shorter bonds of Fortum, Sampo and the Development Bank of Japan as a part of its liquidity management exercise. Of individual bond positions, bonds of the Bulgarian government had a significant positive impact over the month; however, the Development Bank of China, JP Morgan and Wells Fargo remained in debit due to the depreciation of the dollar.

The type of disbursement depends on how much you have accumulated in the fund. The type of payments can be predicted with the concept of the national pension rate, the sum of which is established on the basis of an annually set index. Since April 2017 the sum is EUR 175.94.

How can the funds be withdrawn from the second pillar?

See video

Pension agreement: when more than 50 times the national pension rate has been accumulated

The main option of withdrawing the money accumulated in the 2nd pillar fund is to conclude a pension agreement. This means that upon retirement you conclude an agreement with a life insurance company, handing the funds accumulated in the pension fund over to the disposal of the company. In return, the insurance company will pay you a regular pension until the end of your life. This is important information, as insurance companies are making estimations about the duration of the pension age and calculate the sum of the disbursements made to you. If you live a healthy life and to an old age, the insurance company will make payments to you in a larger amount than the one accumulated in the fund. Otherwise, the insurance company keeps some of the money and uses it to make payments to clients who live to an older age.

Funded pension: when up to 50 times the national pension rate has been accumulated

When up to EUR 9000 has been accumulated in the pension account, the money can be used with periodical payments from the pension fund. For this, an application must be filled in at a bank office or the online bank. In your application, notify the bank of the desired period of the payments and the total duration of the pension payments. How short the period can be is determined by the Funded Pensions Act and depends on the age of the pensioner. Unlike an insurance company, which pays you a pension for the rest of your life, payments from the pension fund are only made as long as there is money on your account. On the other hand, all of the assets in the fund belong to the recipient of the pension, and when they pass away, they are transferred to their heirs.

In a lump sum: when up to 10 times the national pension rate has been accumulated

Money can be withdrawn from the 2nd pension pillar in a lump sum, when less than EUR 1800 have been accumulated in the pension fund.

Bequeathing

The assets of the pension fund can be bequeathed. Heirs are free to choose whether to withdraw the amount at once or to inherit fund shares. An income tax of 20% applies to the cash payments.

Taxes

An income tax of 20% applies to the payments from the pension fund. The income tax calculation is based on the tax exemption to the monthly income of a pensioner, which in 2017 is EUR 416.

LHV Pension Fund L – LHV’s flagship

Suitable if

  • you have more than 10 years left until retirement,
  • you have average risk tolerance
  • the aim is the long-term growth of your pension savings.
Join the fund

Strategy
We invest in different areas, the development of which we believe in (e.g. real estate, forest, private equity, Baltic shares, international stock markets and bonds). We allocate up to 50% of the fund’s assets onto stock markets, obtaining holdings in companies. We invest the rest into bonds and real estate.

Rate of return

From the beginning/ Current year/ Current month

Expenses

Entry fee 0% / Exit fee 0% / Management fee 1,33000%

Information about the fund

Volume of the fund (as of 31.07.2017)714,990,156.62 €

Price of a unit

Management companyLHV Varahaldus

Equity in the fund2 400 000 units

Rate of the depositary’s charge0,06% (paid by LHV)

Depositary where the fund’s assets are heldAS 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 31.07.2017

Biggest investments
EfTEN Kinnisvarafond5.45%
Latvia 01/20213.37%
Latvia 09/20253.34%
Bulgaria 09/20242.95%
JP Morgan Chase 08/20212.61%
Wells Fargo & Company 07/20212.56%
Lithuania 11/20242.47%
Lithuania 01/20242.23%
Morgan Stanley 12/20181.95%
Goldman Sachs 12/20181.90%
Current asset allocation
Money and deposits16.3%
Government bonds19.8%
Corporate bonds36.9%
Real estate8.9%
Shares18.0%
Regional distribution
Money and deposits16.3%
The Baltic states42.5%
Europe (excl. the Baltic states)21.0%
Asia6.2%
North America11.5%
Other1.2%

Baltic stock markets showed good results

Kristo Oidermaa, Portfolio Manager

In June, the stock market indices remained mostly on the minus side in Europe; however, Baltic stock exchanges ended in credit. The Tallinn and Vilnius stock exchanges grew by 1.8% and 0.8%, respectively. The strongest grower was the stock market index of Riga – 14% –, mainly thanks to the shipping company Latvijas Kugnieciba (Lasco). The Dutch energy company Vitol increased their holding in Lasco to 71% and are thus required to make takeover bids to other shareholders. Vitol has set the bid price at EUR 0.71 per share, which is 58% higher than the most recent stock exchange price. Thanks to the significant increase of the Riga stock exchange index, the yield of the Baltic portfolio of the pension fund was 19.8% in the first half of the year. Moreover, Pension Fund L in cooperation with the Livonia private capital fund and Ambient Sound Investments, invested in the Lithuanian telecom company Cgates, which provides TV and internet services to its customers.

While the interest rate increase by the Federal Reserve did not particularly affect the markets, the reverberations were greater after the speech of the President of the European Central Bank, which implied that extraordinary support measures would be withdrawn. As a result, by the end of the month, the prices of longer risk-free bonds were once again at the lowest levels of the year and resulted in a decline of both government and corporate bond markets of almost half a per cent. That said, the price risk in connection with the euro interest rate continues to be high. This is a reason as to why we continue to avoid adding longer bonds to the fund portfolio. Last month, state-owned commercial undertakings Riigi Kinnisvara and Transpordi Varahaldus started to use the first part of the capital raised from bonds. As the limits will be fully taken up in the second half of the year, Riigi Kinnisvara will be among the largest individual investments of the fund.

As a part of our liquidity management exercise, we added shorter bonds from Fortum, Sampo, the Development Bank of Japan and the Japanese commercial bank Sumitomo Mitsui to the fund. We also added positions to the major US banks JP Morgan´s and Wells Fargo´s slightly longer bonds that responded to the weakening of the dollar with a modest decline. The Development Bank of China had a negative result on the month’s result of the fund for the same reason.

The type of disbursement depends on how much you have accumulated in the fund. The type of payments can be predicted with the concept of the national pension rate, the sum of which is established on the basis of an annually set index. Since April 2017 the sum is EUR 175.94.

How can the funds be withdrawn from the second pillar?

See video

Pension agreement: when more than 50 times the national pension rate has been accumulated

The main option of withdrawing the money accumulated in the 2nd pillar fund is to conclude a pension agreement. This means that upon retirement you conclude an agreement with a life insurance company, handing the funds accumulated in the pension fund over to the disposal of the company. In return, the insurance company will pay you a regular pension until the end of your life. This is important information, as insurance companies are making estimations about the duration of the pension age and calculate the sum of the disbursements made to you. If you live a healthy life and to an old age, the insurance company will make payments to you in a larger amount than the one accumulated in the fund. Otherwise, the insurance company keeps some of the money and uses it to make payments to clients who live to an older age.

Funded pension: when up to 50 times the national pension rate has been accumulated

When up to EUR 9000 has been accumulated in the pension account, the money can be used with periodical payments from the pension fund. For this, an application must be filled in at a bank office or the online bank. In your application, notify the bank of the desired period of the payments and the total duration of the pension payments. How short the period can be is determined by the Funded Pensions Act and depends on the age of the pensioner. Unlike an insurance company, which pays you a pension for the rest of your life, payments from the pension fund are only made as long as there is money on your account. On the other hand, all of the assets in the fund belong to the recipient of the pension, and when they pass away, they are transferred to their heirs.

In a lump sum: when up to 10 times the national pension rate has been accumulated

Money can be withdrawn from the 2nd pension pillar in a lump sum, when less than EUR 1800 have been accumulated in the pension fund.

Bequeathing

The assets of the pension fund can be bequeathed. Heirs are free to choose whether to withdraw the amount at once or to inherit fund shares. An income tax of 20% applies to the cash payments.

Taxes

An income tax of 20% applies to the payments from the pension fund. The income tax calculation is based on the tax exemption to the monthly income of a pensioner, which in 2017 is EUR 416.

LHV Pension Fund XL - The boldest choice

Suitable if

  • you have more than 15 years left until retirement,
  • you are prepared to take above-average risks,
  • your aim is the long-term growth of your pension savings.
Join the fund

Strategy
We allocate up to 75% of the fund’s assets into shares, i.e. obtaining holdings in companies. We invest the rest into bonds and real estate. In 2012, we changed our investment strategy; until then, up to 50% was invested into shares.

Rate of return

From the beginning/ Current year/ Current month

Expenses

Entry fee 0% / Exit fee 0% / Management fee 1,33000%

Information about the fund

Volume of the fund (as of 31.07.2017)124,377,459.96 €

Price of a unit

Management companyLHV Varahaldus

Equity in the fund500 000 units

Rate of the depositary’s charge0,06% (paid by LHV)

Depositary where the fund’s assets are heldAS 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 31.07.2017

Biggest investments
EfTEN Kinnisvarafond5.21%
East Capital Baltic Property Fund II4.31%
Latvia 09/20253.15%
Bulgaria 09/20243.14%
Amber Circle Funding 12/20222.56%
WisdomTree Japan Hedged Equity Fund2.53%
JP Morgan Chase 08/20212.53%
Wells Fargo & Company 07/20212.48%
iShares STOXX Europe 600 Health Care2.45%
Morgan Stanley 12/20181.96%
Current asset allocation
Money and deposits22.2%
Government bonds10.6%
Corporate bonds31.2%
Real estate12.8%
Shares23.3%
Regional distribution
Money and deposits22.2%
The Baltic states37.8%
Europe (excl. the Baltic states)17.9%
Asia8.1%
North America10.8%
Other2.1%

Baltic stock markets showed good results

Kristo Oidermaa, Portfolio Manager

June was a rather weak month for European equity markets and the stock exchanges of most countries ended in debit. However, the Japanese stock exchange index, measured in the local currency, increased by 1.9%. Both the Tallinn and Vilnius stock exchanges had a good result with a 1.8% and 0.8% increase, respectively. The Riga stock exchange was the strongest in the Baltics with an increase of 14% thanks to the shipping company Latvijas Kugnieciba (Lasco). The Dutch energy company Vitol increased their shareholding in Lasco to 71% and made a bid to other shareholders to take over the entire company. Vitol has set the bid price at EUR 0.71 per share, which is 58% higher than the most recent stock exchange price Lasco traded with before the transaction. Moreover, Pension Fund XL in cooperation with the Livonia and Ambient Sound Investments private capital funds, invested in the Lithuanian telecom company Cgates, which provides TV and internet services to its customers.

While the interest rate increase by the Federal Reserve did not particularly affect the markets, the reverberations were greater after the speech of the President of the European Central Bank, which implied that extraordinary support measures would be withdrawn. As a result, by the end of the month, the prices of longer risk-free bonds were once again at the lowest levels of the year and resulted in a decline of both government and corporate bond markets of almost half a per cent. That said, the price risk in connection with the euro interest rate continues to be high. This is a reason as to why we continue to avoid adding longer bonds to the fund portfolio. The value of the bond portfolio was most affected by the depreciation of the dollar in relation to the euro, which had a negative impact on the positions of JP Morgan, Wells Fargo and the Development Bank of China. During the month, Riigi Kinnisvara took up the first part of the total volume of the bond contract entered into in spring. By autumn, as the contracted limit of capital will be fully put into use, Riigi Kinnisvara will become one of the largest single positions of the fund.

As a part of our liquidity management exercise, we added shorter bonds from Fortum, Sampo, the Development Bank of Japan and the Japanese commercial bank Sumitomo Mitsui to the fund. We also added positions to the major US banks JP Morgan´s and Wells Fargo´s slightly longer bonds.

The type of disbursement depends on how much you have accumulated in the fund. The type of payments can be predicted with the concept of the national pension rate, the sum of which is established on the basis of an annually set index. Since April 2017 the sum is EUR 175.94.

How can the funds be withdrawn from the second pillar?

See video

Pension agreement: when more than 50 times the national pension rate has been accumulated

The main option of withdrawing the money accumulated in the 2nd pillar fund is to conclude a pension agreement. This means that upon retirement you conclude an agreement with a life insurance company, handing the funds accumulated in the pension fund over to the disposal of the company. In return, the insurance company will pay you a regular pension until the end of your life. This is important information, as insurance companies are making estimations about the duration of the pension age and calculate the sum of the disbursements made to you. If you live a healthy life and to an old age, the insurance company will make payments to you in a larger amount than the one accumulated in the fund. Otherwise, the insurance company keeps some of the money and uses it to make payments to clients who live to an older age.

Funded pension: when up to 50 times the national pension rate has been accumulated

When up to EUR 9000 has been accumulated in the pension account, the money can be used with periodical payments from the pension fund. For this, an application must be filled in at a bank office or the online bank. In your application, notify the bank of the desired period of the payments and the total duration of the pension payments. How short the period can be is determined by the Funded Pensions Act and depends on the age of the pensioner. Unlike an insurance company, which pays you a pension for the rest of your life, payments from the pension fund are only made as long as there is money on your account. On the other hand, all of the assets in the fund belong to the recipient of the pension, and when they pass away, they are transferred to their heirs.

In a lump sum: when up to 10 times the national pension rate has been accumulated

Money can be withdrawn from the 2nd pension pillar in a lump sum, when less than EUR 1800 have been accumulated in the pension fund.

Bequeathing

The assets of the pension fund can be bequeathed. Heirs are free to choose whether to withdraw the amount at once or to inherit fund shares. An income tax of 20% applies to the cash payments.

Taxes

An income tax of 20% applies to the payments from the pension fund. The income tax calculation is based on the tax exemption to the monthly income of a pensioner, which in 2017 is EUR 416.

LHV Pension Fund Indeks – Continuous investment

Suitable if

  • you want to invest on financial markets on a continuous basis,
  • wish to grow your pension pillar at the lowest possible costs,
  • have prior personal investment experience.
Join the fund

Strategy
We invest broadly in equity and real estate funds. When investing, we prefer funds that are exchange traded (ETF), have a low cost rate, hold physical assets (not synthetic), are cost effective, liquid and follow the base index. Up to 75% of the fund’s assets have been invested in equity funds, the rest in real estate funds. We invest in equity funds both in developed, emerging as well as frontier markets, based on global GDP distribution. Whenever the proportion of money in the fund exceeds 2%, it is invested within five working days.

Rate of return

From the beginning/ Current year/ Current month

Expenses

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

Information about the fund

Volume of the fund (as of 31.07.2017)5,488,189.02

Price of a unit

Management companyLHV Varahaldus

Equity in the fund468 750 units

Rate of the depositary’s charge0,0924% (paid by LHV)

Depositary where the fund’s assets are heldDanske Bank A/S Eesti filiaal

We invest up to 75% of the fund’s assets in equity funds, the rest in real estate funds. We invest in equity funds both in developed, emerging as well as frontier markets, based on global GDP distribution. Whenever the proportion of money in the fund exceeds 2%, it is invested within five working days.

The data is presented as at 31.07.2017

Biggest investments
Vanguard Total World Stock ETF9.69%
iShares Core MSCI Emerging Markets ETF9.43%
iShares Global REIT ETF9.28%
Vanguard FTSE Emerging Markets ETF9.22%
BNP Paribas Easy FTSE EPRA/NAREIT Eurozone Capped9.21%
Vanguard FTSE All-World UCITS ETF9.16%
iShares Core MSCI World UCITS8.52%
db x-trackers MSCI World Index UCITS ETF8.50%
SPDR Dow Jones Global Real Estate ETF6.79%
iShares Edge MSCI World Minimum Volatility UCITS E6.36%
Current asset allocation
Money and deposits0.1%
Real estate27.1%
Shares72.9%
Regional distribution
Money and deposits0.1%
Emerging Markets23.6%
Frontier Markets2.6%
Developed Markets73.8%

The type of disbursement depends on how much you have accumulated in the fund. The type of payments can be predicted with the concept of the national pension rate, the sum of which is established on the basis of an annually set index. Since April 2017 the sum is EUR 175.94.

How can the funds be withdrawn from the second pillar?

See video

Pension agreement: when more than 50 times the national pension rate has been accumulated

The main option of withdrawing the money accumulated in the 2nd pillar fund is to conclude a pension agreement. This means that upon retirement you conclude an agreement with a life insurance company, handing the funds accumulated in the pension fund over to the disposal of the company. In return, the insurance company will pay you a regular pension until the end of your life. This is important information, as insurance companies are making estimations about the duration of the pension age and calculate the sum of the disbursements made to you. If you live a healthy life and to an old age, the insurance company will make payments to you in a larger amount than the one accumulated in the fund. Otherwise, the insurance company keeps some of the money and uses it to make payments to clients who live to an older age.

Funded pension: when up to 50 times the national pension rate has been accumulated

When up to EUR 9000 has been accumulated in the pension account, the money can be used with periodical payments from the pension fund. For this, an application must be filled in at a bank office or the online bank. In your application, notify the bank of the desired period of the payments and the total duration of the pension payments. How short the period can be is determined by the Funded Pensions Act and depends on the age of the pensioner. Unlike an insurance company, which pays you a pension for the rest of your life, payments from the pension fund are only made as long as there is money on your account. On the other hand, all of the assets in the fund belong to the recipient of the pension, and when they pass away, they are transferred to their heirs.

In a lump sum: when up to 10 times the national pension rate has been accumulated

Money can be withdrawn from the 2nd pension pillar in a lump sum, when less than EUR 1800 have been accumulated in the pension fund.

Bequeathing

The assets of the pension fund can be bequeathed. Heirs are free to choose whether to withdraw the amount at once or to inherit fund shares. An income tax of 20% applies to the cash payments.

Taxes

An income tax of 20% applies to the payments from the pension fund. The income tax calculation is based on the tax exemption to the monthly income of a pensioner, which in 2017 is EUR 416.

Market overview of pension funds

viisemann avatar

Markets ignore risks, domestic market offers shelter

Andres Viisemann, Head of LHV Pension Funds

June was a calm month on the securities markets. European shares declined by 2.5% during the month, and North American stock exchanges lost 0.7% of their value when measured in euros. Unfortunately, after the long period of growth, such movement is not all that surprising.

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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