European Trade Union Institute, ETUI.

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Estonia

16 February 2017

Estonia: the broad outline of the pension reform is unveiled

On 20 January the government unveiled the broad outline of a pension reform that is designed to do away with special schemes and encourage workers to work for longer.

In order to guarantee the future of the pension system in light of the ageing of the population (if over the past 20 years Estonia has had more than two workers per pensioner, that coefficient will fall below 1.3 by 2060), the government plans to put an end to certain special pension schemes and encourage Estonians to work for longer. The special schemes in question cover the members of the armed forces, public prosecutors, police officers and border guards. Anyone recruited after 1 January 2020 will be subject to the general scheme. Pensions under the general scheme will be calculated primarily on the basis of the number of years of contributions, which, in comparison to the current system, will put those with short careers and low incomes at a disadvantage. This reform will be introduced gradually between 2020 and 2037. In addition, the size of pensions will depend on life expectancy from 2027. The Ministers for Social Affairs and for Finance will present a draft law for adoption in 2018, after holding the necessary consultations.

The President of the Estonian Trade Union Confederation (EAKL), Peep Peterson, has written to the Prime Minister, Jüri Ratas, to say that the EAKL is willing to help the government to put in place the necessary changes as it is conscious of the current problems, but he has also asked that pensions be set at no less than 55 % of a person’s average salary, compared with 40 % in Estonia today. In any event, it is unlikely that the trade unions will accept the growth in inequalities that the new system will bring about. The tripartite consultations will undoubtedly be difficult.

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