The IMF recommends that the government keep the second pension pillar manadatory
The International Monetary Fund (IMF) recommends that the government keep the second pension pillar mandatory, as the second pillar complements the first pillar. Eesti Pank shares this opinion.
Drawing on the experience of other countries, the IMF recommends moving forward very carefully with changes to the pension system. It considers it important that the long-term impact of the planned pension changes be assessed and that all interested parties be involved in a thorough discussion of the changes.
“The findings of the assessments by Eesti Pank and the IMF are similar. The first and second pension pillars complement each other and are crucial in a country with an ageing population. This discussion affects the savings of 700,000 people. If a lot of people leave the second pension pillar, the pension assets of those who remain in it will probably be reduced”, said Governor of Eesti Pank Madis Müller.
Like Eesti Pank, the IMF noted that the pension system should be reviewed, and there is a consensust on that. The IMF further warned that if a lot of people leave the second pillar and spend all their savings, growth in the economy could become very volatile.
The IMF delegation was in Estonia from 22 October to 4 November to discuss the condition of the Estonian economy and the economic policy steps taken and planned with the public and private sectors. The visit was part of the IMF’s annual mission to Estonia as part of the Article IV consultations.
The concluding statement of the IMF visit can be found on the Eesti Pank website.