Baltic-based financial services provider, Luminor, has revealed that its pension funds demonstrated stable growth in 2025, with both index-based and actively managed strategies delivering solid long-term performance.

2025 was also a strong year for the firm's client growth and customer satisfaction, as interest in pension funds increased markedly, prompting many individuals to review their previous choices.

The Luminor Index pension fund was also among those selected in the mandatory funded pension draw.

“In total, the number of Luminor Index clients increased by around 2,400 people through new members and the draw,” Luminor pension funds manager, Vahur Madisson, revealed.

“Among our actively managed funds, the number of Luminor 16–50 pension fund clients grew by more than 3,200.”

Madisson noted that index funds offered advantages through lower costs and broad diversification, while actively managed funds allowed managers to apply experience and flexibility across different market cycles.

However, he argued that 2025 demonstrated that both approaches could be successful when managed consistently and responsibly.

Looking at longer-term performance, Luminor 16–50 continued to rank among the strongest actively managed second pillar pension funds.

Madisson added that following a reduction in management fees in 2024, the Luminor Index pension fund became the second pillar fund with the lowest ongoing fees in Estonia in 2025, contributing to its inclusion in the pension fund draw.

Beyond second-pillar savings, Madisson encouraged individuals to consider third-pillar pensions where possible, warning that relying solely on the state pension was likely to result in a significant decline in living standards in retirement.

To broaden saving options, Luminor launched a new third-pillar index fund, Luminor Tulevik Index, aimed primarily at savers aged 16 to 55, investing globally in equity indices.

However, Madisson stressed that Luminor’s oldest third-pillar fund, Luminor Tulevik 16–50, is currently the highest-yielding third-pillar fund in the market based on 15-year returns.

He also highlighted growing attention on service quality and transparency across the sector.

Madisson outlined that maintaining direct contact with customers was central to Luminor’s approach, particularly for individuals for whom pension saving was not a daily consideration.

“Choosing a pension fund is not a one-time decision, but something that should be reviewed periodically,” he continued.

“We aim to reach people transparently and responsibly, always acting in the best interests of the customer.”

Meanwhile, Madisson emphasised that Luminor closely monitored customer feedback and satisfaction, noting that, out of tens of thousands of customer interactions and several thousand new clients in 2025, only four complaints were received regarding external pension fund sales.

He said this supported the firm’s view that its distribution approach met regulatory and ethical standards.

Looking ahead, the fund manager concluded that savers should focus on long-term returns, cost levels, investment strategy and consistency across different market conditions when assessing pension funds, rather than short-term performance.

“Last year’s results show that both index funds and actively managed pension funds can offer strong long-term returns and stability when chosen correctly,” he said.

“It is important that the fund aligns with a person’s age-related investment horizon and risk tolerance.”

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