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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 Supplementary Pension Fund

Suitable if

  • you have more than 10 years left until retirement age
  • you have low risk tolerance
  • your aim is to preserve your savings and avoid losses
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Benefits for you
The state refunds the income tax on the money invested in a third pillar pension fund. For instance, if you invest EUR 100, you will receive an income tax refund of EUR 20 next March. Investing in LHV Supplementary Pension Fund is simple. All you need is a securities account at the Estonian Central Register of Securities, which can be opened free of charge at LHV.

Rate of return

From the beginning/ Current year/ Current month

Expenses

Entry fee 0% / Exit fee 1% / Management fee 1%.

Information about the fund

Volume of the fund (as of 31.03.2017)9,119,285.50 €

Price of a unit

Management companyLHV Varahaldus

Depositary where the fund’s assets are heldSwedbank

Where do we invest?

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 31.03.2017.

Biggest investments
EfTEN Kinnisvarafond6.15%
East Capital Baltic Property Fund II5.65%
Bulgaria 09/20243.76%
Lithuania 11/20243.01%
Amber Circle Funding 12/20222.99%
WisdomTree Japan Hedged Equity Fund2.85%
Tallinna Kaubamaja2.77%
Citadele banka 12/20262.66%
Lithuania 02/20232.50%
Olainfarm2.41%
Current asset allocation
Money and deposits19.6%
Government bonds14.9%
Corporate bonds23.1%
Real estate12.6%
Shares29.8%
Regional distribution
Money and deposits19.6%
The Baltic states45.0%
Europe (excl. the Baltic states)17.8%
Asia7.2%
North America6.0%
Other4.5%
Fund’s fortunes

A positive month for both stock and bond markets

Romet Enok, Portfolio Managerc

February was predominantly a positive month for the global stock markets. A good rate of return was shown by several European countries as well as the United States and Latin America. Shares of the Tallinn Kaubamaja Group grew by 6.3 per cent in February, thanks to the notice that the company is planning to pay out record dividends of EUR 0.63 per share. This makes Kaubamaja’s rate of dividend return almost 7 per cent. Arco Vara’s share declined by 17.3 per cent over the month, as the company reported a loss for 2016. Despite the loss, targets remain positive for the future, and a profit of EUR 1.8 million is expected as soon as this year. A positive surprise for the shareholders was Latvian pharmaceutical company Olainfarm, which announced a dividend payout of EUR 0.66. The pension fund’s rate of return was additionally supported by the fund encompassing Europe’s pharmaceutical companies and by the company Roche, the share prices of which increased by 6.3 per cent and 6.1 per cent, respectively, in February.

Considering the fact that in light of the improving macroeconomic indicators and the looming interest increase by the U.S. Federal Reserve, the interest environment in Europe could be expected to improve rather than decline, the wide-scale price increase in bonds and thus the drop of interest rates back to the start-of-the-year level was somewhat surprising. Still, the market distortions resulting from the activities of the European Central Bank and their effects must continually be taken into account. As a result of the wide-scale decline in interest rates, the European corporate bond market managed to reach positive territory in February, even when calculated from the beginning of the year. Still, the unattractive risk-to-profit ratio is currently keeping away additional higher-risk investments from Europe. Our bond investments in issuers from the Baltic states and Eastern Europe have been left untouched by the biggest fluctuations this year, offering a rate of return that is in rhythm with the dynamics of higher-rated bonds. Over the month, we added positions in shorter-term Neste bonds and in longer-term dollar-emitted securities emitted by the China Development Bank

Disbursements

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

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.
Buy units

Benefits for you
The state refunds the income tax on the money invested in a third pillar pension fund. For instance, if you invest EUR 100, you will receive an income tax refund of EUR 20 next March. LHV Pension Fund Indeks Pluss makes investing simple. All you need is a securities account at the Estonian Central Register of Securities, which can be opened free of charge at LHV.

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 31.03.2017)857,910.50 €

Price of a unit

Management companyLHV Varahaldus

Equity in the fund468 750 units

Depositary fee0,0924%

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

Where do we invest?

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 31.03.2017.

Biggest investments
iShares MSCI ACWI ETF9.31%
iShares Core MSCI Emerging Markets ETF8.86%
db x-trackers MSCI World Index UCITS ETF8.43%
iShares Core MSCI World UCITS8.22%
Vanguard Total World Stock ETF8.18%
Vanguard FTSE All-World UCITS ETF8.13%
Vanguard FTSE Emerging Markets ETF7.80%
iShares Edge MSCI World Minimum Volatility UCITS E7.72%
iShares Edge MSCI Min Vol Global ETF7.57%
Vanguard FTSE Emerging Markets UCITS ETF7.54%
Current asset allocation
Money and deposits1.0%
Shares99.1%
Regional distribution
Money and deposits1.0%
Emerging Markets31.4%
Frontier Markets4.1%
Developed Markets63.6%
Disbursements

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

Increased focus on Estonian investments

Andres Viisemann, Head of LHV Pension Funds

In February, positive feelings were prevalent on the securities markets. Stock markets were on the rise almost everywhere in the world, driven mainly by high expectations regarding the fiscal policy of the United States. Investors had been buying equities, hoping that the archaic tax system in the US would be simplified, during which taxes would be also lowered, and that after years of tightening regulations the situation would be now alleviated.

Benefits of III pillar

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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