Front page : Protection of Mandatory funded pensions : For pension fund unit-holders : Term of compensation

Term of compensation

Activities before the date of compensation for damages by the Guarantee Fund

If the Financial Supervision Authority has ascertained a breach of the requirements stipulated in legislation or the rules of a pension fund and there is reason to believe that such a breach has caused damages to the pension fund’s unit-holders, the Financial Supervision Authority issues a precept to the pension fund management company requiring them to compensate the unit-holders for the damages caused.
In order to compensate for the damages, the pension fund units belonging to the pension fund management company or the person who acted as the pension fund management company are redeemed and new units are issued to the unit-holders who suffered damages.
The pension fund management company must publish a notice about the procedure and deadlines for compensation for damages within three business days of receipt of the Financial Supervision Authority’s precept in at least one national daily newspaper and on its own website or on the website of the group to which it belongs.

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.

Giving notification to unit-holders

Within three working days after the date of receipt of the notice from the Supervision Authority, the Fund shall publish a corresponding notice in a daily national newspaper on at least two occasions. The notice shall contain at least the following information:

the name of the pension fund with regard to which the decision was made;
information as to when and how unit-holders can obtain information regarding the compensation granted to them;
the procedure and terms for compensation.

The Guarantee Fund and the The Financial Supervision Authority publish this information immediately on their web sites.

After determination of the compensation, the Fund shall, at the request of a unit-holder, notify the unit-holder of the amount of compensation granted to him or her and of the related circumstances.

Term of compensation

Not later than within forty-five calendar days after receipt of the notice from the Supervision Authority, the Fund shall:

send the names and personal identification codes of the unit-holders entitled to receive compensation and the amounts of compensation granted to them to the registrar;
transfer the amount of money necessary for compensation to the bank account indicated by the registrar.

The registrar shall compensate for loss pursuant to the procedure provided for of the Guarantee Fund Act within ten working days after receipt of the information and money.

At the request of the Fund or the registrar, the Supervision Authority may extend the specified terms of compensation with good reason.

If the Fund fails to compensate an entitled person for loss within the specified period, the person has the right to file a claim against the Fund. The limitation period for filing a claim shall be five years.

Time limits*	Activities	Performer
The date of arising the liability for compensation is: The term specified in a precept of the Supervision Authority to the pension management company to compensate the loss caused to the unit-holders of a mandatory pension fund. The date of sending a notice to the Fund by the Supervision Authority informing that the loss caused to the unit-holders have not been compensated by the pension management company.
Within 3 working days	Notification of investors	Guarantee Fund
	Publish a corresponding notice in a daily national newspaper and in the website of Fund setting out the procedure and terms for compensation.
Not later than within 45 calendar days	Send the names and personal identification codes of the unit-holders entitled to receive compensation and the amounts of compensation granted to them to the registrar; Transfer the amount of money necessary for compensation to the bank account indicated by the registrar.	Guarantee Fund
Not later than within 60 calendar days	Compensation of losses	Registrar of the Estonian Central Register of Securities
	The registrar shall compensate for loss The registrar shall, for the amount of compensation granted to a unit-holder, acquire for the unit-holder the maximum whole number of units of the pension fund
	the Supervision Authority may extend the terms with good reason.	Financial Supervision Authority
Up to 5 years	Right of claim	Unit-holder
	If the Fund fails to compensate an entitled person for loss within the period prescribed in this section, the person has the right to file a claim against the Fund.

*Time limits are calculated from the date of arising the liability for compensation