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.
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 30.09.2018)14,858,686.15 €

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 30.09.2018.

Biggest investments
EfTEN Kinnisvarafond5.98%
East Capital Baltic Property Fund III3.07%
East Capital Baltic Property Fund II2.72%
Citadele banka 12/20262.68%
iShares DAX EX2.49%
PKO Bank Polski 01/20192.11%
JP Morgan Chase 08/20212.10%
Wells Fargo & Company 07/20212.08%
Total Capital Intl 03/20202.03%
SAP 03/20212.03%
Current asset allocation
Money and deposits9.05%
Government bonds8.16%
Corporate bonds39.68%
Real estate13.08%
Shares30.11%
Regional distribution
Money and deposits9.05%
The Baltic states38.93%
Europe (excl. the Baltic states)34.87%
Asia4.49%
North America12.35%
Other0.39%

European equity markets were in slight decline, Japan showed good results

Romet Enok, Fund Manager

The result of fund was influenced by a 0.9% decline in both German and Finnish stock markets in September. However, the Japanese stock market performed in a positive manner, which in a month rose 3.1% in euros and as much as 5.5% in local currency. For example, the pension fund Supplementary that includes Seven & I, a holding company which owns 7-Eleven convenience stores in Japan, rose 11.2% on the Tokyo Stock Exchange in a month.

September also turned out to be a month with a slightly negative rate of return in Baltic equity markets. The biggest decrease was recorded in the Vilnius Stock Exchange with –1.6%. The Tallinn Stock Exchange fell 0.7% and the Riga Stock Exchange was down 0.1%. In Riga, the drug-maker Olainfarm was among the falling stocks, down by 5.7% in a month. The power struggle between the heirs of the former large shareholder of the company is becoming more and more tense and, therefore, some uncertainty has arisen as regards future plans.

In September, we completely sold the fund’s bonds of one of the largest corporate bonds outside the Baltics - bonds of the Brazilian food industry BRF. The results of the company are expected to worsen and the Brazilian economy has been in difficulty. Nevertheless, the bonds acquired exactly three years ago yielded more than twice the rate of return on the average market for corporate bonds issued in euros, i.e. around 15%.

The international bond markets are still pushing for a rise in interest rates in the United States, which has left the main market segments a month behind. We focus on analysing local investment opportunities, as has been the case for some time.

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.
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 30.09.2018)1,814,509.63 €

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 30.09.2018.

Biggest investments
Lyxor Core MSCI World DR UCITS29.33%
db x-trackers MSCI Emerging Markets Index UCITS28.92%
iShares Core MSCI World UCITS27.69%
db x-trackers MSCI World Index UCITS ETF6.83%
Vanguard FTSE Emerging Markets UCITS ETF3.46%
iShares MSCI Frontier 100 ETF2.78%
Current asset allocation
Money and deposits1.00%
Shares99.01%
Regional distribution
Money and deposits1.00%
Emerging Markets32.38%
Frontier Markets2.78%
Developed Markets63.85%

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.

Market overview of pension funds

Bond markets are waiting for change
Andres Viisemann, Head of LHV Pension Funds

August was a fairly nerve-racking month on the securities markets. European corporate shares lost 2.3% of their value. The stock prices of Estonian equities declined by 2.8%. While most of the world's stock markets remained negative, the technology sector helped the US stock market to reach a small plus in euro terms

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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