Nearly a third (31 per cent) of Estonians who withdrew their money from the second pillar pension would like to start saving again, research conducted by Norstat on behalf of Baltic-based financial services provider Luminor has revealed.

Under current legislation, anyone who has withdrawn money from the second pillar before reaching retirement age must wait 10 years before resuming contributions, but a bill currently before the Estonian parliament, Riigikogu, would reduce this waiting period to five years.

Both Luminor and the Organisation for Economic Co-operation and Development (OECD) have previously called for the 10-year wait to rejoin the Estonian second-pillar pension system to either be abolished or reduced.

The Norstat survey, which included 1,001 Estonian respondents aged 18-74, found that almost a fifth (19 per cent) had withdrawn money from the second pension pillar and do not plan to rejoin, while 11 per cent have withdrawn money and would like to rejoin.

Additionally, 42 per cent of respondents are currently investing in the second pillar and plan to continue saving, while a further 7 per cent are saving in the second pillar but have considered withdrawing their money.

However, the survey also revealed that 16 per cent of respondents have never joined the second pillar and 6 per cent have invested all or part of their money into the third pillar.

Luminor head of pension funds, Vahur Madisson, said the results show that some of those who left the second pillar have reconsidered their earlier decision and wish to better secure their future.

“The survey shows that although people had different reasons for withdrawing funds from the second pillar, a significant proportion of those who left now see the need to save for their pension in the long term once again,” Madisson added.

“This is an important signal, as time is one of the most decisive factors in saving. The longer pension assets can grow, the better the chances of building up a larger financial buffer for old age.”

Interest in rejoining the second pillar is particularly strong among younger Estonians, with around 45 per cent of those aged 18 to 29 who withdrew their money from the second pillar saying they would like to rejoin.

Madisson explained that young people have the longest time until retirement and therefore stand to gain the most from resuming their savings as early as possible.

“A break of a few years may seem short, but over a long savings period it means less time during which contributions and returns can grow their pension assets,” Madisson noted.

Speaking on the bill before the Riigikogu, Madisson emphasised that 10 years is a “very long break” in terms of saving for a pension.

He suggested that although a five-year waiting period would still carry significant weight in the decision to leave the pillar, it would also allow people who have reconsidered their earlier choice to return within a more reasonable timeframe.

He pointed out that the results of Luminor’s survey suggested genuine interest in such an option.

Madisson also stressed that rejoining does not undo the interim break in saving.

“The sooner a person starts saving again, the more time there is to grow their pension assets. It is therefore worth keeping a regular eye on your long-term pension plan and assessing the role of the second and third pillars, as well as other savings, as a whole," he concluded.

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