September 19, 2019 / 11:46 AM / a month ago

Estonia sees 25-30% of pension scheme assets withdrawn after reform

TALLINN, Sept 19 (Reuters) - Estonians are expected to take out 25-30% of assets from the 4 billion euros ($4.4 billion) state pension scheme which the government plans to open up from the start of 2021, Finance Minister Martin Helme said on Thursday.

Last month the government said it would introduce legislation to change the pension system in October.

“Our forecast is that the money leaving will be around 25-30%. This will not all happen at once, but the larger wave will likely happen when we open the opportunity,” Helme told a news conference.

Economists expect the move to boost spending and prices in the small economy of 1.3 million people, where private spending totals half of the 26 billion euro gross domestic product.

By the end of last year, 725,470 Estonians had joined the voluntary second pillar of the pension system - where funds totalled 3.95 billion euros and the largest fund managers are Swedbank, LHV and SEB.

“Next year the amount will top 5 billion euros,” Helme said.

The change of the pension system was a key promise of the conservative Fatherland party, the smallest partner in Estonia’s three-party coalition which formed a cabinet in April. (Reporting by Tarmo Virki; Editing by Mark Potter)

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