OREANDA-NEWS. November 27, 2009. The first pensioners started receiving payouts from the second pension pillar at the start of this year. Even though the savings period was short, the pensions of pensions who joined the second pension pillar are almost 10 percent bigger than the pensions of those who did not join the pillar, reported the press-centre of SEB Pank.

10,000 people who had joined the funded pension became entitled to payouts at the start of the year, many of whom postponed their payouts. Those who started receiving the payouts now get an extra 10 percent on top of their state pension.

“The current second pillar pensioners only saved for their pensions for 6 to 7 years instead of the usual 30 to 40 years. This is why the payouts are still small. However, they are a rather important additional amount for people who only get the national pension. It proves once again that it pays to carry on making payments into the second pension pillar in the next year as every extra year of saving increases the amount you receive when you retire,” said Director of SEB Life and Pension Insurance Indrek Holst.

The state has suspended its contributions until 2011, but clients can continue with their own payments into the second pension pillar fund until the state resumes its payments. The analysis made by SEB confirms that it pays for clients to continue their contributions, as this guarantees them a bigger pension in the future. A person who earns an average salary will save 140,000 kroons more for their retirement over a 40-year savings period if they continue their contributions.

Continuing with the contributions is particularly important for those who have less time left until their retirement. People who have 20 years left until their retirement will increase their pension assets by 12% if they continue with their contributions in 2010. People who have 10 years left until their retirement will increase their pension assets by 22% if they continue with their contributions.

“As saving for one's pension is primarily a personal responsibility and possibility of a person, SEB advises everyone who has a second pension pillar to definitely continue with their contributions. People who do not continue making payments into the second pension pillar should have an alternative solution to saving for their pensions. It definitely pays to continue if you do not have an alternative plan like this,” added Indrek Holst.

Approximately 40 percent of the funded pension clients of SEB have submitted applications to continue with their contributions. 591,822 people in Estonia have joined the second pension pillar and 171,850 of them had chosen SEB as the manager of their pension assets.

Contracts for continuing with the second pension pillar can be entered into at any SEB branch or via the Internet bank U-Net until 30 November.