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The former Estonian government has decided to “unlock” the pension funds (PF): people can decide whether they want to keep accumulating or not. Individuals can no longer use the services of the funds and manage their old-age investments in a special pension investment account. However, withdrawing money by stopping the accumulation is also allowed.
The decision, which came into effect this year, poses significant challenges. About 20 percent of pension fund participants have already refused to accumulate and will receive lower pensions in old age; have taken the opportunity to withdraw and withdraw money. This will end your accumulation for at least 10 years; a second return to the system is allowed only after that period.
It is estimated that each Estonian who withdraws from the fund will regain an average of 8.5 thousand in autumn. The total amount will be 1,300 million euros. It is true that of this amount you will still have to pay 20 percent income tax.
Although the money has not yet been recovered, loans are already being taken in Estonia, which are aimed at real estate, stock exchanges or simply for consumption, experts say. An even bigger spending boom is expected in the fall.
“My personal opinion is not to do the same reform in Lithuania. It’s a bad future,” says Romet Kreek, editor of the investment section of the Estonian economy portal Arileht, who writes about the economy.
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