18. December 2020
LHV reminds its clients that if they wish to join the third pension pillar this year, then the third pillar should be opened and the first contribution be made no later than on 29 December. However, we are waiting for applications for opening the third pillar for children until 22 December. To ensure that things take place smoothly, you should make sure that both the applications and the payment order are correct in every way.
Opening your own personal third pillar
If an adult client of LHV Bank wishes to join the third pension pillar, he or she can do so by submitting an application selecting the desired third pension pillar and purchasing LHV third pillar fund units through the LHV internet bank using a pre-filled payment form “Purchase third pillar fund units. The purchased pension fund units are reflected in the pension account within 2 working days, at the latest. In order to join the III pillar before the end of 2020, the contribution should be made by 29 December, at the latest.
Opening the third pillar for a child
As it is possible to purchase third pillar pension units for children too, it should be borne in mind that opening a pension account for a child is a bit more complicated and that it does not take place automatically, thus opening the account requires a bit more time. LHV points out that when starting to create a third pillar account for a child after 22 December, the pension units may not reach the child’s pension account before the end of the year.
An overview of opening a third pillar for a child can be found in this guide. To open the third pillar through LHV, the child should have an account with LHV Bank. The parent must correctly fill in the application for the third pillar pension fund, confirmation of the legal representative must be provided for securities transactions with an authorisation for the pension account, these documents need to be saved as PDF-s and then digitally signed. Thereafter, the documents must be sent to kliendihaldurid@lhv.ee. A representative of the bank will contact the applicant after reviewing the documents. The first payment to the child’s third pillar account can only be made after having received notification that the account has been opened.
In order to join the pension fund before the end of 2020, the first contribution must be made to the pension fund and the pension units must be reflected in the account before the end of the year. LHV would like you to note that in order to direct money to the fund, the payment order for the contribution must exactly meet the requirements provided in the payment order form. Payment with incorrect data or even a typing error will be refunded and the third pillar account will not then be activated, as the pension fund unit will not be purchased in that case.
By opening the third pillar in 2020, it is possible to receive the income tax back from your third pillar investment already next year. It will also be possible to withdraw money from the third pillar in the future, after a period of five years, with a 10% tax benefit that will already apply from the age of 55. If the third pillar is opened for a child before the end of 2020, then the child too can withdraw money from the pillar at a lower tax rate in the future. From January 2021, the age limit for tax-exempt payments will be raised.
Read more:
LHV third pillar page
Frequently asked questions
