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Pension Protection Sectoral Fund

Formation of sectoral fund

  • The Pension Protection Sectoral Fund shall be established out of the contributions paid by the management companies of mandatory pension funds. 
  • The Pension Protection Sectoral Fund shall be used in order to ensure that the interests of unit-holders are protected under the conditions and to the extent provided by the Guarantee Fund Act
  • The management companies of mandatory pension funds pay to the Fund the single and quarterly contributions using the rates established by the supervisory board of the Fund.

Management company’s activity licence

Management company is a public limited company whose main and permanent business is to manage the assets of the fund established as a public limited company or a common fund. A management company may manage several funds.

A public limited company must have an activity license to operate as a management company. The Financial Supervision Authority issues and annuls activity permits.

A management company applies for an activity license for fund management or an activity license for fund management with the right to provide mandatory pension fund management services.

A management company may manage two or more mandatory pension funds only if the mandatory pension funds managed by the management company have significantly different investment policies pursuant to the rules of these funds.

The Financial Supervision Authority may declare an activity license invalid if the investment firm has failed to pay the contributions to the Investor Protection Sectoral Fund specified in the Guarantee Fund Act by the specified deadline or to the full extent.


Single contributions and terms of payment

The size of the single contribution shall be 1 000 euro per pension fund managed by a pension management company.

A pension management company shall pay the single contribution within one month after registration of the pension fund rules by the Financial Supervision Authority.

The pension funds rules are presented on the webpage of  Financial Financial Supervision Authority.


Calculation and payment of quarterly contribution

Calculation

The quarterly contribution shall be calculated on the basis of the net asset value of all pension funds managed by a pension management company as on the last day of the quarter preceding payment of the contribution. 

The size of a contribution shall be calculated by multiplying the total amount of the net asset values of the pension funds by the contribution rate established by the supervisory board of the Fund.

The size of a contribution shall be calculated by the pension management company.

Reporting and payment

The pension management company 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. 35 "Procedure for Reporting on Quarterly Contributions to Pension Protection Sectoral Fund" issued by the Minister of Finance on 27 May 2009 (More in Estonian Rahandusministri määrus 27.05.2009 nr 35 "Pensionikaitse osafondi kvartaliosamakse aruandluse kord"). 

The pension fund management company submits a corrected report 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. 

A pension management company shall pay quarterly contributions on a regular basis by the 15th day of the second month of each quarter.

If a pension management company 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 a pension management company 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 of the Fund shall establish a uniform contribution rate for all pension management companies as a percentage of the net asset values of the pension funds and it shall not exceed 0.1%.

If the value of the assets of the Sectoral Fund exceeds 1 000 000 euro and the loans from credit institutions or other persons or 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 the contribution rate shall not exceed 0.025%.

The supervisory board of the Fund has established the quarterly contribution rate of the Pension Protection Sectoral Fund at the level of 0,005% of the total amount of the net asset values of the pension funds. 

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. 


Deferring payment of quarterly contributions

The supervisory board may, by a resolution thereof, permit deferral of the payment of up to one quarter of a quarterly contribution if the pension management company assumes the obligation to pay the deferred part of the contribution immediately upon submission of a corresponding request by the Fund. 

The total amount of contributions deferred by one pension management company shall not exceed 0.2% of the total amount of the net asset values of the pension funds.

The Fund may require a pension management company to insure performance of the obligation or to secure performance of the obligation by a third party acceptable to the supervisory board of the Fund.

The Fund shall submit a request for payment of the deferred part of the contribution when the obligation arises to pay compensation out of the Sectoral Fund.

The maximum contribution rate prescribed in the Guarantee Fund Act does not apply to the payment of a deferred part of a contribution.


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 constitute at least 1% of the net asset value of all pension funds;
  • the value of the assets of the Sectoral Fund exceeds 1 000 000 euro;
  • the loans in the case of compensation 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. 

 

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