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 31.01.2018)537,719.29 €

Price of a unit

Management companyLHV Varahaldus

AS SEB Pank

The data is presented as at 31.01.2018

Biggest investments
Tartu Linnavalitsus 10/20325.98%
Lithuania 05/20224.67%
IBM Corporation 11/20203.92%
Lithuania 02/20233.29%
Romania 10/20253.26%
Korea (Republic of) 12/20213.24%
Elering 07/20182.92%
Apple 11/20222.88%
China Development Bank 01/20222.48%
JP Morgan Chase 08/20212.07%
Current asset allocation
Money and deposits58.79%
Government bonds17.19%
Corporate bonds24.03%
Regional distribution
Money and deposits58.79%
The Baltic states20.28%
Europe (excl. the Baltic states)4.31%
Asia5.72%
North America10.91%
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 31.01.2018)14,096,264.71 €

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 31.01.2018.

Biggest investments
EfTEN Kinnisvarafond6.25%
East Capital Baltic Property Fund II2.79%
Citadele banka 12/20262.79%
Tallink Grupp2.38%
PKO Bank Polski 01/20192.22%
Total Capital Intl 03/20202.14%
Volkswagen Intl FIN NV 03/20192.13%
Tallinna Kaubamaja2.12%
JP Morgan Chase 08/20212.02%
United Parcel Service 07/20202.01%
Current asset allocation
Money and deposits22.54%
Government bonds8.00%
Corporate bonds30.87%
Real estate9.72%
Shares28.90%
Regional distribution
Money and deposits22.54%
The Baltic states34.29%
Europe (excl. the Baltic states)28.03%
Asia4.38%
North America8.96%
Other1.83%

The Baltic stock market made the biggest contribution

Romet Enok, Portfolio Manager

2017 was another successful year for risk assets. Risk assets are currently regarded to be real estate, stock market and private equity investments along with the respective funds. Last year, each portfolio from these segments provided a rate of return of at least 12%.

The biggest contributor to the fund’s rate of return in 2017 was made by the Baltic stock market, as the rate of return of our Baltic share portfolio amounted to a whole 23.7% (along with the dividends received). The biggest contributions were made by the share of Tallink with an increase of 35.9%, Šiaulių bank with 57.4% and Grindex with 54.9%. We sold our holding of Latvijas kuģniecība that was bought out from the minority shareholders by the major shareholder, earning a rate of return of 51%.

The average rate of return of the real estate funds in our portfolio was 12.6% last year. Investors are becoming increasingly interested in the local commercial real estate market, which has also pushed up the asset prices. This is why, in relation to our fund investments, there were a few noteworthy exits from investments in the past year. The EfTEN real estate fund sold the Prisma property in Narva to the French fund manager Corum for 16.7 million euros. East Capital Balti Property Fund II sold the shopping centre located in Vilnius on Gedimino Avenue to the Lords real estate fund, earning an average annual rate of return of 15% of the investment.

Due to the fear of a growth of interest rates, we acquired bonds from highly-rated issuers offering a floating interest rate. A new prominent asset class in the fund is now comprised of the securities of BMW, Volkswagen, UPS and Daimler with a maturity of up to five years. It was a rather bleak month on the European bond markets, as interest rates were rising and both the corporate and government bonds ended up in the negative.

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 31.01.2018)1,622,159.63 €

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 31.01.2018.

Biggest investments
db x-trackers MSCI USA Index UCITS ETF10.75%
db x-trackers MSCI Emerging Markets Index UCITS9.77%
Schwab International Equity ETF8.66%
iShares Core MSCI World UCITS8.20%
db x-trackers MSCI World Index UCITS ETF7.13%
Vanguard Total World Stock ETF6.98%
Vanguard FTSE Emerging Markets ETF6.66%
iShares Edge MSCI Min Vol Global ETF6.45%
iShares Core MSCI Emerging Markets ETF6.08%
Schwab Emerging Markets Equity ETF5.30%
Current asset allocation
Money and deposits0.34%
Shares99.67%
Regional distribution
Money and deposits0.34%
Emerging Markets32.16%
Frontier Markets3.23%
Developed Markets64.28%

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

Retrospect 2017: Investment environment and economy
Andres Viisemann, Head of LHV Pension Funds

Global financial markets were beyond the expectations of investors in 2017 and offered easy return to those willing to take the risk. LHV Pension Funds, however, have been pretty careful in taking the risks for quite a few years now. The direct cause of it is the fact that the prices of equities, bonds as well as real estate are very high compared to cash flows offered by these assets.

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