You are here

Pension Qualifying Period

 

Pension Qualifying Period

The pension qualifying period is formed of activities in your life like studying, raising children, and military service.

The pension qualifying period is divided into two:

  1. Years of pensionable service until 31.12.1998, calculated according to the employment record book and documents (link pensioniõiguslikule staažile);
  2. Pension accumulation period starting from 01.01.1999, calculated according to the social tax paid for you (link pensionikindlustusstaažile).

The pension qualifying period can also consist only of the years of pensionable service, or of the pension accumulation period.

 

 

Years of Pensionable Service

The following activities shall be considered as included among the years of pensionable service (until 31.12.1998):

  1. Working;
  2. Working as a self-employed person (provided that you paid the social tax);
  3. Military service at the Estonian defence forces;
  4. Studying at a vocational educational institution, institution of professional higher institution, or at the university (full-time);
  5. Raising a child until the age of three (to one parent);
  6. Raising a child for at least eight years (for one parent, two years per each child);
  7. Participating at an employment training through the employment office, and time during which you received the unemployment benefit;
  8. Taking care of a Category I disabled person, or a disabled child under the age of 18;
  9. Membership at artistic or trade associations;
  10. Working at a farm if the farm was exempt from paying taxes;
  11. Mandatory work when punished with a conditional detention, participation at corrective works without detention, or time at preventive treatment and work.
Raising Children
The parents shall agree among themselves who will use the years of pensionable service:
  • For raising a toddler until the age of three;
  • For raising a child (8 years).

The agreement shall be evidenced by a written consent.

 

  • Example 1. Toomas and Hilja were not married. Both were in their twenties when they had a daughter Maarika. Toomas is marked as Maarika’s father on the birth certificate. When the girl was two, Toomas left the family. Today, Hilja is applying for a pension. She must add a written consent by Toomas to the application that raising Maarika will be calculated among Hilja’s years of pensionable service.
  • Example 2. Peeter and Liivia were married and had two children – Piia and Pille. Gunnar and Kersti were married and had also two children – Lauri and Laura. Years went by, lives changed, and Gunnar divorced his first wife Kersti and married Liivia, who had just split up with her husband Peeter. Liivia’s children from the first marriage (Piia and Pille), and Gunnar’s younger child Laura, who was 7 when her father got married again, were living with Liivia and Gunnar. Today, Liivia is retiring. She has got a written consent from Peeter that she can calculate raising Piia and Pille among her years of pensionable service. As Liivia has raised Gunnar’s younger child Laura for 8 years and been married to Laura’s father Gunnar during this period then, at the consent of both biological parents (at the consent of Gunnar and Kersti), she can add raising Laura also among her years of pensionable service.
Serving at the Soviet Army

Working and studying at the territory of the Soviet Union until 31.12.1990 shall be calculated among the years of pensionable service if you have at least 15 years of Estonian pension qualifying period.

The mandatory military service and alternative service duration at the territory of the Soviet Union until 31.12.1990 shall be calculated among the years of pensionable service, on the condition that all the following conditions are met:

  • You were sent to service from Estonia;
  • You have at least 15 years of Estonian pension qualifying period;
  • No other country is paying you pension for this time period.

or

  • Before and after sending to service from outside Estonia, you were living in Estonia;
  • You have at least 15 years of Estonian pension qualifying period;
  • No other country is paying you pension for this time period.

 

 

Pension Accumulation Period

Starting from January 1st, 1999, the pension accumulation period calculation is based on the social tax. The pension accumulation period is used to check your years of employment and whether you are entitled to receive a pension. The pension accumulation period is not a basis for calculating the pension amount.

We shall accept the pension accumulation period for one year if the insurance component of the social tax has been paid for you during this year from at least the minimum salary.

  • Example 1: If you have received a minimum salary for 15 years, your pension accumulation period is 15 years.

If the social tax paid for you has been calculated from an amount smaller than the minimum salary, your pension accumulation period shall be less than 1.

  • Example 2: If you have worked half-time for 15 years and your salary has been half the minimum, your pension accumulation period is 7.5 years. To get a 15-year accumulation period on these conditions, you must work 30 years.
 

Insurance Component

The insurance component is taken into account when calculating the pension amount.

The insurance component is the relation between the social tax paid for you and the medium social tax in the Republic of Estonia. Your insurance component amount is the total of all your insurance components since 01.01.1999 until today. The amount of the insurance components can be checked via the registry query (link eesti.ee).

The following example describes the formation of the insurance component in 2015, when the average salary was 11,628.60 euros per year. When your entire salary in 2015 was 11,628.60 euros (regardless of the months worked), your insurance component is 1.

  • Example 1. If you worked in 2015 and got a monthly salary of 969.05 euros or a yearly salary of 12 x 969.05 = 11,628.60 euros, then your insurance component for 2015 is 1. If you worked 3 months in 2015 and were paid 3,876.20 euros, meaning that your yearly salary was 3 x 3,876.20 euros, then your insurance component for 2015 is also 1.

The following example shows how does the salary size influence the size of the insurance component in 2015. If you receive a salary that is higher than the average, the insurance component for the year 2015 increases.

  • Example 2. If you worked in 2015 and got a monthly salary of 1,520 euros or a yearly salary of 12 x 1,520 = 18,240 euros, then your insurance component for 2015 is 1.569. If you worked 4 months in 2015 and were paid 4,560 euros, meaning that your yearly salary was 4 x 4,560 = 18,240 euros, then your insurance component for 2015 is also 1.569.

The following example shows how does the salary size influence the size of the insurance component in 2015. If you receive a salary that is lower than the average, the insurance component for the year 2015 is less than 1.

  • Example 3. If you worked in 2015 and got a monthly salary of 870 euros, then your insurance component for 2015 is 0.898.

 

Conclusion

The insurance component for a specific year equals 1 if the yearly amount of social tax paid from your income equals the medium yearly amount of social tax paid in the Republic of Estonia.

The insurance component is larger than 1 if the social tax paid for you exceeds the medium yearly social tax paid in the Republic of Estonia.

  • Example 4. Anu worked as a director of a large company from 1999 until 2015. The employer has paid social tax for her for 17 years. As her salary has been higher than the Estonian average, then Anu’s insurance component for 17 years is 32.456.

The insurance component is lower than 1 if the social tax paid for you is lower than the medium yearly social tax paid in the Republic of Estonia.

  • Example 5. Toomas worked as a junior sales clerk at an electronics store from 1999 until 2015. The employer has paid social tax for him for 17 years. Toomas has a pension accumulation period of 17 years. As his salary is lower than the Estonian average wages, then the size of his insurance component for 17 years is 14.567.

You can check the size of your insurance components via the registry query (eesti.ee).

 

 

Kati Kümnik

head of the compensations department

Kati Kümnik organizes and directs the work of the compensation department: sets goals, gives instructions to officials, and performs and mediates tasks related to the organization of pensions. She also advises the Social Insurance Board on issues related to pensions and organizes the development of a pension system.

 
kati.kumnik@sotsiaalkindlustusamet.ee