Front page : Protection of Mandatory funded pensions

Protection of Mandatory funded pensions

Compensation of damages to unit-holders of mandatory pension funds

The purpose of the Guarantee Fund is to protect the funds invested by unit-holders of mandatory pension funds during the savings phase of mandatory funded pension funds as well as the phase of pension payments.

The Fund collects single and quarterly contributions from mandatory pension fund management companies to meet its purpose.

The Fund is obliged to compensate for the loss caused to mandatory pension fund unit-holders for which the unit-holders have not been compensated by the pension management company by the due date established by the Financial Supervision Authority. Protection of mandatory pension fund unit-holders by the Guarantee Fund will be launched after the pension fund management company has failed to follow the precept issued by the Financial Supervision Authority and failed to compensate unit-holders for the damages.

  • Damages subject to compensation in the amount of up to 10,000 euros are compensated to a unit-holder in full.
  • Losses that exceed 10,000 euros per specific loss event of a unit-holder are compensated to the extent of 90%.

The registrar of the Estonian Central Register of Securities acquires the maximum full number of pension fund units for the unit-holder for the amount of compensation determined and transferred by the Guarantee Fund.

Compensation is determined and pension fund units are acquired within two months.

Who are the unit-holders of mandatory pension funds whose damages are not compensated for the account of the Pension Protection Sectoral Fund? Check here. 

Supporting transfer of insurance portfolio of mandatory pension contracts

The purpose of the Guarantee Fund is to guarantee protection of funds invested by policyholders who have entered into pension contracts with insurers in respect of payments to be made from the funded pension. The Fund collects single and quarterly contributions from insurance companies that enter into pension contracts to meet its purpose.

The Annuity Protection Sectoral Fund is used to support the transfer of the insurance portfolio of pension contracts of a life insurance company operating in Estonia on the basis of an activity license (insurer) and the Estonian branch of an insurer from a state that is a contracting party to the EEA Agreement to another insurer by declaring the activity license of the first insurer in valid, establishing a special regime or declaring bankruptcy of the first insurer.

The support guarantees the pension payments to the policyholders under pension contracts (mandatory funded pension insurance contracts).

The Financial Supervision Authority organises a competition for transfer of insurance portfolios. Insurance portfolios are transferred to insurers who request the smallest amount of support in their offers for acceptance of insurance portfolios.

The transferor and transferee of an insurance portfolio and the Guarantee Fund enter into an insurance portfolio transfer contract.

  • Performance of the obligations under pension contracts is guaranteed in full to the extent of monthly pension payments equalling one national pension rate as established on the basis of the Pension Insurance Act and to the extent of 90% percent in respect of the amount that exceeds said rate.
  • The national pension rate is 275.34 euros.

The Fund shall pay out the amount of support not later than within one month of receipt of the Financial Supervision Authority’s notice about determination of the insurer who accepts the insurance portfolio.

Whose insurance contracts are not supported for the account of the Annuity Protection Sectoral Fund? Check here.