Commentaries on Pension Act

12.09.2001 TLN

Tallinn Stock Exchange (TSE) and Estonian Central Depository for Securities (ECDS) welcome the parliament’s approval of Pension Act on September 12 and consider it a significant legislative step for the long-term development of Estonian economy and capital markets.

Launch of the Pension system’s second pillar will have an important and positive long-term effect on the capital markets. It will bring along an increase in domestic savings which will in the coming years form an important part of investments to the Estonian securities market. It also improves Estonian companies’ financing opportunities from the capital markets and creates a more stable economic environment, less dependent on volatile inflows of foreign portfolio investment.

“It is a bold and far-sighted political move, which will definitely have a long-term positive effect on Estonia’s economy,” Gert Tiivas, CEO of TSE said. “It has been clear for a long time that the current pension system is not sufficient for guaranteeing normal living standards for tomorrow’s retirees. The Parliament has now taken a big step encouraging private savings so people will be better off in the future.”

“An important precondition for the successful launch of the reform is raising awareness about the new system among general public. We, together with banks and the rest of the financial sector, are ready to support the state in that,” Jaanus Erlemann, Chairman of the Supervisory Board of ECDS said. “We, together with state institutions and account operator banks, feel the responsibility for the successful launch of the system. We are convinced that we can guarantee a modern, efficiently operating infrastructure.”

ECDS, the Tax Board and account operator banks are responsible for creating the infrastructure and servicing the second pillar of the pension system.

The law will become effective on October 1, 2001. People will be able to join the second pillar and choose obligatory pension fund starting from March 1, 2002. Payment collections to the second pillar funds will start on July 1, 2002.

Additional information:

Gert Tiivas
CEO of TSE
Tel: +372 6 408 840

Jaanus Erlemann
Head of Supervisory Council of ECDS
Tel: +372 6 408 800