Annuity Protection Sectoral Fund

Formation of sectoral funds

  • The Annuity Protection Sectoral Fund shall be established out of the contributions paid by the insurers - life insurance companies and used in order to guarantee pension payments to policyholders according to the mandatory funded pension insurance contracts under the conditions and to the extent provided by the Guarantee Fund Act. 
  • The life insurance companies pay to the Fund the single and quarterly contributions using the rates established by the supervisory board of the Fund.

Insurer’s activity license

Insurer is a company whose main and permanent business is to pay an agreed amount of money or indemnify for the damages caused by insured events at the occurrence of insured events.

Life insurance is one of the main types of insurance and one of its types is annuity, which means life insurance contracts where periodic payment of the indemnity is agreed, including mandatory funded pension insurance contracts. This means that licensed life insurance companies can enter into mandatory funded pension insurance contracts.

Companies must hold the relevant activity licenses in order to engage in insurance activities. Activity licenses are granted for operating in one or several types of insurance or, at the request of the applicant, in a subtype of insurance.

Insurers established in Estonia and Estonian branches of insurers established in countries that are contracting parties to the EEA Agreement who hold annuity licenses and are fund participants in the Annuity Protection Sectoral Fund provided in the Guarantee Fund Act and who has concluded a contract with the registrar of the Estonian Central Register of Securities have the right to enter into mandatory funded pension insurance contracts.

The Financial Supervision Authority issues activity licenses to companies established in Estonia.

In order to apply for an activity license, the applicant must submit, in addition to other data and documents, the document in which the applicant enters into the obligation to pay the single contribution stipulated in the Guarantee Fund Act.

The Financial Supervision Authority may declare an activity license invalid in full or in respect of single types or subtypes of insurance activities if it appears that an insurer who enters into pension contracts has not paid the contributions to the Annuity Protection Sectoral Fund required pursuant to the Guarantee Fund Act either by the prescribed deadline or in full.

Single contributions and terms of payment

The size of the single contribution shall be 1 280 euro.

An insurer shall pay the single contribution within one month after entering into the first insurance contract for a mandatory funded pension.

Calculation and payment of quarterly contributions


The quarterly contribution are calculated on the basis of premiums from the insurance contracts for a mandatory funded pension paid to the insurer or a branch during the quarter preceding the payment of the contribution.

The amount of the quarterly contribution is found by multiplying the sum of insurance premiums of pension contracts with the contribution rate established by the supervisory board of the Guarantee Fund.

For the purposes of the Guarantee Fund Act, a pension contract means a mandatory funded pension insurance contract.

The total amount of insurance premiums and the contribution to be paid is calculated by the insurer.

Reporting and payment

The insurer shall submit a report on the size of the contribution to the Fund through the Supervision Authority to the extent and pursuant to the procedure established by the minister responsible for the area. See Regulation No. 44 "Procedure for Reporting on Quarterly Contributions to Annuity Protection Sectoral Fund" issued by the Minister of Finance on 9 December 2008 (More in Estonian Rahandusministri määrus 09.12.2008 nr 44 "Pensionilepingute osafondi kvartaliosamakse aruandluse ulatus ja kord").

A corrected report must be submitted to the Financial Supervision Authority if an error is found in previously submitted data or if the calculation principles used in previous reporting periods are changed.

An insurer shall pay quarterly contributions on a regular basis by the 15th day of the second month of each quarter.

If an insurer fails to pay a contribution or does not pay a contribution in full by the due date (by the 15th day of the second month of each quarter), the Fund shall charge a fine for delay in the amount of 0.2% of the outstanding amount per day.

If an insurer fails to pay a contribution by the due date or to perform any other obligation arising from the Guarantee Fund Act, the Fund shall immediately notify the Financial Supervision Authority of such failure.

Contribution rate

The supervisory board establishes the contribution rate as a percentage of the total amount of the insurance premiums of pension contracts and it may not exceed 0.5%.
Until 1 January 2019 the quarterly contribution rate of the Annuity Protection Sectoral Fund Pension Contracts Sectoral Fund may not exceed 0.05% of the total amount of the insurance premiums of all the pension contracts entered into by the insurer.
The supervisory board of the Fund shall establish a uniform contribution rate for all insurers.
Any amendment of a contribution rate shall enter into force as of the beginning of a quarter, but not earlier than two months after adoption of the corresponding resolution of the supervisory board of the Fund.

Suspending collection of quarterly contributions

On the basis of a resolution of the supervisory board, the Fund shall suspend the collection of quarterly contributions if all of the following conditions are met:

  • The assets of the sectoral fund form at least 1% of the pension contract obligations of all insurers;
  • The value of the assets of the Annuity Protection Sectoral Fund exceeds 1 000 000 euro;
  • The loans in the case of supporting from credit institutions or other persons and the money received from other sectoral funds for the performance of the obligations of the Sectoral Fund have been fully repaid together with the interest thereon