Strong performance
For years, our pension funds have been among Estonia’s most successful, offering a good yield. LHV funds are structured to outperform the market average yield when the market is surging, and to withstand a crisis.
Why choose LHV’s II pillar funds??
Experienced fund managers
LHV pension funds are run by experts who have decades of experience in making assets grow and are constantly adding to their knowledge. Every day, our investment team analyses how the economy and financial markets are doing so that we can increase your future security in the best possible way.
Intelligently managed risks
To achieve the highest possible long-term yield, we manage risks by diversifying assets. We invest in different asset classes and consider equity, real estate, bonds and private capital markets.
Which fund is right for you?
Actively managed funds
At LHV, active management of pension funds means we’re constantly looking for the best place to put your money to work for you. Sometimes it might be a holding in a company, at other times, real estate, or maybe even a loan to a business with growth potential. Occasionally we’ll invest in an asset on the world’s biggest stock market, or construction of new apartments right here in Estonia. And sometimes it’s wisest to wait before making a decision. All of this requires analysis, seeing things through and continuous attention – that is how LHV’s pension fund managers lay conditions where your retirement nest egg can grow.
Different pension funds at LHV have the same active management strategy but are distinct in terms of their underlying assets. That allows you to choose the one that’s right for you.
Index fund
Most of the fund’s assets are invested on equity markets. That can mean higher yields but also more volatility. Like most index funds, the fund charges a small administration fee. Risks are wisely diversified and don’t depend on just how US stock markets are performing.
How to join?
It’s easy to become a unitholder in LHV’s II pillar pension fund. It just takes a few minutes on the internet bank or mobile app.
Join the LHV II pillar
Choose your preferred LHV fund
Direct your future contributions into the new fund and/or transfer your existing units
You’ve taken the first step to growing your future security
Investing, with a difference
When it comes to managing our pension funds, we’re inspired by investment strategies at major funds in developed countries and the best practices worldwide. Besides investing in equity, we also make allocations to other asset classes. That gives individual investors access to institutional investor assets.
| Actively managed funds | Index funds | |
|---|---|---|
Listed equities | ||
Private companies | ||
Property | ||
Precious metals | ||
Raw materials | ||
Bonds | ||
Forest |
The comparison is a simplified view of the characteristics of passively and actively managed funds at LHV. The comparison leaves out a few index funds, which may include other asset classes.
Get the most out of the II pillar
By default, 2% of your gross earnings are contributed to the II pillar pension fund. You have the option of increasing your own contribution to 4% or 6%, which accelerates the growth of your savings. In any case, the government always adds a 4% share from social tax toward your retirement.
Monthly contribution to second pillar (your contribution + the state’s contribution)Size of second pillar by end of savings periodYou’ll save more for your pension compared with a 2% contribution
Calculator calculation
Net salary is calculated considering the tax-free income in one month and the income tax rate, which from 2025 will be €700 and 22%, respectively.
The unemployment insurance premium is also taken into account, which in 2024 is 1.6% of gross salary.
The size of the second pillar by end the of savings period is calculated using the formula
Sn = S(n-1) × (1 + Expected return per year) + Gross salary × 12 × (1 + salary increase)n × contributions
- n= is the number of years left until retirement age (65)
- salary increase= 3% per year according to the long-term forecast of the Ministry of Finance
- contribution= state’s contribution (4%) + your contribution (2%, 4% or 6%)
Disbursements
When you reach retirement age, there are several ways of withdrawing your funds, and it’s also possible to combine different options.
You can start drawing your II pillar pension as early as five years before reaching official retirement age.
Succession
II and III pillar pension funds have a major advantage compared to the I pillar state pension: the assets accumulated in these funds can be bequeathed. Successors can choose to withdraw the funds in the pillar as a lump sum or to inherit the fund units. That will determine whether they have to pay income tax on the inherited assets, and in what amount.
