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 31.03.2018)14,593,515.03 €

Price of a unit

Management companyLHV Varahaldus

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

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 31.03.2018.

Biggest investments
EfTEN Kinnisvarafond6.15%
East Capital Baltic Property Fund III3.01%
Citadele banka 12/20262.72%
East Capital Baltic Property Fund II2.70%
iShares DAX EX2.51%
PKO Bank Polski 01/20192.15%
Tallinna Kaubamaja2.09%
Total Capital Intl 03/20202.07%
Volkswagen Intl FIN NV 03/20192.06%
Tallink Grupp2.02%
Current asset allocation
Money and deposits17.53%
Government bonds8.27%
Corporate bonds30.62%
Real estate13.18%
Shares30.40%
Regional distribution
Money and deposits17.53%
The Baltic states38.46%
Europe (excl. the Baltic states)29.08%
Asia4.31%
North America8.97%
Other1.65%

A weak month in global stock markets also affected the outcome of the Fund

Romet Enok, Fund Manager

March was a weak month for global stock markets and stock market shocks were also reflected in the monthly yields of pension funds. Even the Baltic stock markets, which were continuously having a positive outcome from the beginning of the year, experienced a slight decline in March.

The biggest drivers of the decline in the Baltic market were the Tallink shares, which announced the completion of the strategic decision process. After the receipt of the disappointing news for investors, Tallink's share fell by more than 10%. The second large event was the takeover bid made by Odyssey Europe to Olympic Entertainment Group.

LHV pension funds are small shareholders in Olympic and we will make a decision on the sale as of the beginning of May when it is clear how other significant investors behave.

By the end of the first quarter of the year, the European bond markets remained at -0.4% for corporate bonds and at -0.5% for companies with a lower rating. The corporate and government bond market totalled 0.7% thanks to increased fears over the global economic outlook and the extremely strong result of Italian government bonds in recent weeks. Similarly to the quarter as a whole, the market for companies remained at a slight minus in March, and the government bond market was only able to offer a return of 1.6% thanks to the already mentioned exceptionally strong result of the Italian market.

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 31.03.2018)1,676,706.10 €

Price of a unit

Management companyLHV Varahaldus

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

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 31.03.2018.

Biggest investments
iShares Core MSCI World UCITS13.20%
db x-trackers MSCI Emerging Markets Index UCITS10.81%
db x-trackers MSCI USA Index UCITS ETF9.84%
Schwab International Equity ETF8.00%
db x-trackers MSCI World Index UCITS ETF6.51%
Vanguard Total World Stock ETF6.42%
Vanguard FTSE Emerging Markets ETF6.14%
iShares Edge MSCI Min Vol Global ETF6.09%
iShares Core MSCI Emerging Markets ETF5.65%
Schwab Emerging Markets Equity ETF4.86%
Current asset allocation
Money and deposits0.58%
Shares99.41%
Regional distribution
Money and deposits0.58%
Emerging Markets31.43%
Frontier Markets3.14%
Developed Markets64.84%

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

Focus on investment opportunities within the local market
Andres Viisemann, Head of LHV Pension Funds

The year began with a strong rise in stock markets. The European as well as the U.S. market rose by 1.6% in January when measured in euros, with the stock markets of developing countries moving with a great deal of momentum, rising by 4.4% during the month. The prices of stocks in Latin America and Russia experienced the biggest increase. The Tallinn Stock Exchange also finished the first month of the year with a respectable increase of 3.9%.

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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