OREANDA-NEWS. December 11, 2013. This year, SEB’s pension survey indicated that half of Estonians aged 40 to 60 would like to retire before the official retirement age, that is before the age of 63, and finance their retirement from their third pension pillar savings.

“The advantage of the third pension pillar is that contributions to the pillar are exempt from income tax, and starting from the age of 55 third pillar disbursements either have lower income tax or are exempt from income tax – depending on the agreement. If we look at the third pillar financial opportunities of 50-year-olds today, these fall below people’s wishes. On average, the amount of assets accumulated in the third pillar is EUR 1,500-2,000. Therefore, when living extremely ascetically, for instance, for EUR 100 each month, this money would still not last for longer than for a year or two,” said Indrek Holst, Head of SEB Elu- ja pensionikindlustus.

People start to think about retirement and collecting pension funds only when they are 45 or 50 years old. The SEB pension survey once again confirmed the hypothesis regarding people’s expectations: 40-year-olds plan to work for as long as possible and retiring is out of the question. At the same time, recipients who are a couple of years older would like to retire earlier, at least by the age of 63.

In order to achieve the replacement rate of 65-70 per cent, according to the analysis made by SEB, the deficit of the current generation’s third pillar pension assets at the moment of retiring, that is, in 2040, is almost EUR 18 billion. By adding the employer’s contribution to the accumulation of pension assets, i.e., the employer’s pension, the deficit is decreased. The above should be requested from the employer. Companies have the opportunity to support their employees and contribute to their personal third pillars to provide for the future.

“The expected lifespan is constantly increasing, with people spending an average of twenty years in retirement. In order to enjoy their old age, people should start saving for their retirement already in their twenties. The accumulation period should be more than 35 years. The accumulated money should be divided over a period of twenty years,” noted Holst.