August 22, 2019 / 3:06 PM / 4 months ago

Estonia to allow savers to unlock 4 bln euros in state pension funds from 2021

TALLINN, Aug 22 (Reuters) - Estonia is planning to allow savers to unlock 4 billion euros ($4.43 billion) in funds from its state pension scheme from the start of 2021, its Finance Minister Martin Helme said on Thursday.

Economists expect the move to boost spending and prices in a small economy of 1.3 million people, where private spending totals half of the 26 billion euro gross domestic product.

Helme said the government plans to introduce legislation to change the pension system in October, with the law coming into force gradually during 2020.

“The first payments should be made in the beginning of 2021,” Helme told a news conference.

The change of the pension system was a key promise of the conservative Fatherland party, the smallest partner in Estonia’s three-party coalition which formed a cabinet four months ago.

By the end of last year 725,470 Estonians had joined the voluntary second pillar of the pension system, where the largest fund managers are Swedbank, LHV and SEB.

Its funds total 3.95 billion euros, according to Finance Ministry data. ($1 = 0.9027 euros) (Reporting by Tarmo Virki; Editing by Helena Soderpalm and Jan Harvey)

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