1. The state shall suspend contributions to the second pillar of the funded pension that are made at the expense of social tax (4%) collected (subsections 13 (19)–(22) of 13 of the Social Tax Act)
Exception is made for persons born between 1942 and 1960 – their contributions to the second pillar of their funded pension that are made at the expense of social tax (4%) collected will not be automatically stopped from 1 July 2020 and will continue as usual. However, they can, if they wish so, suspend 4% and 2% contributions from the social tax collected for payments to the second pillar starting from 1 December, if in October 2020, they present the corresponding application for stopping the payments from being made (see point 2).
Nothing changes for the employer in terms of declaring and paying the social tax on the tax declaration TSD due to the suspension of payments made for funded pension part of the social tax. The employer declares and pays the social tax in the usual way, all necessary activities are performed by the Estonian Tax and Customs Board itself.
2. Obligated persons have the right for suspension of funded pension payments (2%) - it is possible from 1 December 2020 until 31 August 2021 (§ 673 of Funded Pensions Act)
In October 2020, everyone joining the pillar will be able to decide whether to stop making the 2% payment from their salary earned. To do this, they must submit an application for non-payment of the contribution to the funded pension with a court administrator or registrar in the internet bank, bank office or via the website of the Pension Centre. Based on this application, the payment of the 2% contribution to the funded pension will then be suspended from December 2020 until 31 August 2021. People born between 1942 and 1960 can also suspend making payments to the funded pension; if they apply to not make the payments, they will also suspend making their 4% payment to the funded pension.
Starting 1 November 2020, employers must check the suspension or continuation of withholding of their employees' payments to the funded pension. If an employee has submitted an application for the suspension of payments to the funded pension, then on tax declarations TSD for December 2020 until for August 2021, the employer may not declare the payment to the funded pension of that employee. If the employee has not submitted an application for suspension of the payments to the funded pension, then the contributions to the funded pension shall be continued to be declared as usual.
The person submitting the application also does not make the payment to the funded pension from the income received on an Entrepreneur Account.
A self-employed person who has submitted the application to suspend making contributions to the funded pension shall not make the payment to the funded pension from 1/12th of the business income earned in 2020.