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Second pillar payments

How you live in retirement depends on your age and the amount of assets you have accumulated in your pension pillar.
You can begin receiving your second pillar pension five years before the statutory retirement age. However, when withdrawing money from your pension fund, keep in mind that income tax depends on your age and the payment solution chosen.

Pension payment options

When you withdraw money in retirement, you will pay either 0% or 10% income tax

If you have reached retirement age and sign either a funded pension contract based on your life expectancy or a lifetime pension (annuity) contract with an insurance company, you will not have to pay income tax on your second pillar pension payments.

If you choose a shorter period for the payments or lump sum payments, you will have to pay 10% income tax.

When you withdraw money before retirement age, you will pay 22% income tax

If you want to use the money collected in the second pension pillar before retirement age, the only option is to withdraw the entire amount at once and pay 22% income tax. Consequently, you will leave the second pillar and lose the opportunity to build up a pension with state contributions over the following ten years.

Make decisions that directly affect your future only after thoroughly considering all the options. You have time. You can withdraw your money from the second pension pillar at any time, i.e. this option will always remain available.

Comparison: money from II pillar or a loan

Do you wish to compare what would be more useful: to cover existing loans and important expenses at the expense of Pillar II, or to borrow money from a bank for this purpose? Use the pension money calculator.

Pension money calculator

Before you apply for a payout from the second pillar

  • Consider your long-term sources of income and
  • Find out the value of your second pillar pension assets.
  • In retirement, consider choosing a funded pension. Your money will continue to grow in the fund and you will receive regular monthly payments

You can find out the value of your total pension assets at LHV self-service or in the My Pension Account section of the Pension Centre’s website.

You will not have to retire as soon as you reach retirement age. If you continue to work after reaching retirement age, both your state and funded pensions will continue to grow. There are about 400,000 old-age pensioners in Estonia, 16.4% of whom work.

Read more about retirement planning and pension taxation

Let us know if you have any questions

Together we will find the right solution.

Reet Roos
pension consultant
Mon–Fri 8–17
680 2743
Sign up for a consultation


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