Estonia, Financial Services, Pensioners
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Tuesday, 19.03.2024, 08:44
Estonia: Maximum rate of management fees for 2nd pillar pension funds drops to 1.2%
The amendments, which entered into force on Jan. 1, aim
to increase the yields of the funds of the second pension pillar by decreasing
the management fees, and expand pension funds' investment options, the Ministry
of Finance said.
With the amendment, the previous management fee cap of
2% was lowered to 1.2% of the value of assets. The management rate limit for
conservative pension funds is already 1.2%.
Pursuant to the adopted amendments, in case of positive
investment performance, charging a success fee as part of management fee will
be allowed starting from 2020. The fee can be added if the productivity of a
mandatory pension fund exceeds the rate of growth of the pension insurance
portion of social tax starting from September 2019, or, in case of funds
established later than that, from the moment when the fund was established. A
success fee cannot be charged for the management of a conservative pension
fund.
The amendment eliminates some investment restrictions
imposed on pension funds. From now on, funds investing a hundred % in shares
are allowed. The concept of a conservative pension fund will be preserved, and
the amendments will enable them to invest up to 10% of their assets in shares.
Currently, said funds may not invest in shares.
Increased volumes of investment in real estate are now also
permitted for second pillar funds, which is expected to support investment in
Estonia. The maximum size of investment in a single piece of property has been
raised from the current 5% to 10% of the value of a fund's assets.