OREANDA-NEWS. July 17, 2013. Until 15 September 2013, people accumulating a pension can choose whether to submit an application to increase the amount of contributions to the second pillar for the years 2014-2017.

As of today, more than 7,500 SEB clients have submitted an application to receive, for the next four years in their second pillar pensions, 9 per cent instead of the current 6 per cent, of which 3 per cent is the person’s own contribution and 6 per cent is paid by the state from the first pillar.

“The activity of increasing the contribution rate has gained momentum, but increasing the contributions is a voluntary decision. It is every person’s conscious and considered decision which options to use to ensure their pension. Our job is to provide the client with the necessary information and advice.

SEB clients have submitted applications at the same rate as the general market and we shall continue working to ensure that our clients can make a decision most suitable for them, whether to increase their second pillar pension contributions or rather invest in the third pillar, in which bonuses are found in the form of more favourable taxation for both contributions and disbursements,” said Indrek Holst, Chairman of the Management Board at AS SEB Elu- ja Pensionikindlustus.

According to Holst, the number of people increasing their pension contributions to the second pension pillar reflects the overall faith in the pension system. “It also indicates how well people understand what their pension and personal financial situation are dependent upon in retirement. If the number of people increasing payments remains low and the number of people accumulating in the third pillar does not increase either, possible alternatives should be analysed to guarantee a reasonable and anticipated standard of living in retirement,” he said.

There is no need to visit a branch to submit an application for increasing the second pillar pension. The easiest way is to fill in the application for second pillar increase in the Internet Bank. However, the application should not be submitted at the last moment, because it is an important decision.

If a person who continued contributions in 2009 does not submit an application for increasing their second pillar pension, then in 2014-2017 the state shall pay into the second pillar 6 percent instead of the current 4 percent you shall continue contributing 2 per cent of your monthly salary in total, the second pension pillar receives 8 per cent each month If a person who did not continue contributions in 2009 does not submit an application for increasing their second pillar pension, then in 2014-2017 the state shall pay into the second pillar 4 per cent you shall continue contributing 2 per cent of your monthly salary in total, your second pension pillar receives 6 per cent each month.

“Primarily, young people who have more time to accumulate for their retirement should think about the application for increasing second pension pillar contributions.  While in the short term perspective the state pension gives a better result than the second pillar, people who have less than five years until retirement should consider the benefit of submitting an application for increase,” Holst added.