At Question Time of the Riigikogu (Parliament of Estonia), Minister of Social Protection Margus Tsahkna replied to the questions of Raivo Põldaru on the mandatory funded pensions.
Raivo Põldaru referred to the fact that less than 1/3 of the total rate of return of the second pillar pension funds had gone to the owners of the money, and the rest had gone to the banks. Põldaru asked the Minister of Social Protection how the Government would ensure that the money invested in funds did not go to the banks, but to the pensioners as a pension supplement.
The Minister of Social Protection said that today’s pensioners need not worry. “The Government of Estonia is paying pensions and is increasing them each year, and the fact is that we are paying additional amounts to these pensions directly from the state budget. But here, in front of you, I am telling you the truth that the pension system needs to be reformed,” Tsahkna said.
“The numbers that we can see in this initial analysis show that our pension system is not sustainable in the long-term perspective, and the main reasons for that are demographic problems,” Tsahkna said.
The Minister gave some examples. “According to forecasts, if nothing changes, if the number of children born to us does not increase, then in 2060, which is not a distant future in terms of pension system, our population will have dropped from 1.31 million to 1.1 million. As to the number of working-age people, then it will be smaller by 32 percent, or by 256,000 persons, by that time. And at the same time, the number of pension-age people will increase by 106,000 persons, or 41 percent,” Tsahkna said.
In Tsahkna’s opinion, these numbers tell us that Estonia has to conduct a very serious analysis of the sustainability of its pension system. “And we must have the courage to make the necessary decisions,” he added.
Prime Minister Taavi Rõivas answered the question of Mailis Reps and Andres Herkel on the administrative reform, Arno Sild’s question on the financing of agriculture, Valeri Korb’s question on environmental charges and Krista Aru’s question on pension funds.
Minister of the Interior Hanno Pevkur answered Ain Lutsepp’s question on the situation around Piusa border guard station, Martin Helme’s question on preventing illegal crossing of border and Uno Kaskpeit’s question on the disturbances at Harku Detention Centre in November 2015.
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