Pensionikindlustust

Pensionikindlustust, often translated as pension insurance, refers to a system designed to provide financial support to individuals during their retirement years. In Estonia, it is a mandatory, funded system managed by the state. The system is based on the principle of contributions made by employees and employers, as well as the state's own contributions, which are invested to generate returns. These accumulated funds are then paid out as pensions upon reaching the retirement age.

There are three pillars to the Estonian pension system. The first pillar is the mandatory state pension, funded by social security contributions. This provides a basic level of income security for all retirees. The second pillar is mandatory funded pensions, where a portion of an individual's social security contributions is invested by pension funds. Participation in this pillar is automatic for most individuals born after 1983, though there are options to opt out or choose a pension fund. The third pillar consists of voluntary occupational pension schemes and private savings, which individuals can establish to supplement their state and mandatory funded pensions.

The goal of pensionikindlustust is to ensure a reasonable standard of living for citizens after they cease active employment. The specific amount of pension received depends on factors such as the length of contribution periods, the amount of contributions made, and the investment performance of the funded pension pillar. The system is subject to ongoing reforms aimed at ensuring its long-term sustainability and adequacy in the face of demographic changes.