You can influence the amount of your pension even after reaching retirement age. The most important factors are whether you postpone retirement and whether you continue working.

1. Postponing your pension (flexible retirement)

If you are entitled to an old-age pension, you do not have to start receiving it immediately. You may postpone the granting of your pension.
The later you retire, the higher your monthly pension will be.

According to 2026 calculations, the pension increases on average as follows:

1 year later → +7.93%
2 years later → +16.88%
3 years later → +27.01%
4 years later → +38.50%
5 years later → +51.57%

Read more: Social Insurance Board website.

Example
Kersti’s pension would be 700 euros per month. She decides to postpone retirement by 2 years.
As a result, her pension increases by approximately 16.88%, and after two years she would receive about 818 euros per month.

* The exact increase percentage depends on your year and month of birth and the time your pension is granted. The specific percentage is calculated individually.

2. Working while retired

Working during retirement may also increase your pension.

By working, you continue to accrue pension rights in the first pillar.

Funds in the second and third pillars continue to earn investment returns.

Pensions are recalculated every year on 1 April (indexation).

Income earned in the previous year is also taken into account.

While working, you may receive both salary and pension at the same time.

Read more in the article: “What are the options for combining the best pension for yourself?"

Try it yourself 

In the Pension Calculator, you can test different scenarios and see how postponing retirement or continuing to work affects the amount of your pension.
 

Saving during your working years: how to do it as effectively as possible

• The first pillar (state pension) is designed to cover only your basic needs. To maintain a reasonable quality of life in retirement, it is wise to focus during your working years on growing your funded pension in the second and third pillars.
• Increase your second pillar contribution rate from 2% or 4% to 6% of your gross salary. You can do this on the Pension Centre website. This will have a noticeable impact on the size of your future pension.
• Make regular contributions to the third pillar (and increase the amount gradually if possible).
• Start saving as early as possible. With long-term saving, the effect of compound interest works in your favour (see figure). Saving for a shorter period will also provide additional income in retirement, but the impact is smaller compared to starting early.

Saving in the second and third pillars comes with tax benefits, and the accumulated funds earn investment returns. This makes funded pensions one of the most effective ways to save for retirement.

Try different scenarios in the Pension Calculator and see how your choices affect your future pension.
 

If you have the first, second and third pillars, you do not have to treat them all in the same way.

Having all three pillars gives you several options to combine payouts from your funded pension pillars with the state old-age pension, because state pension payments and funded pension payments are not linked to each other.

There are many possible combinations, so consider carefully:

• When you plan to retire
• What your long-term sources of income are and what your expenses are (food, medicines, housing and other costs)
• What your balance in the second and third pillars is and when you joined them (for example, this affects third pillar tax benefits)
• What the risk level of your investments (second and third pillar) is

Payouts from the state pension

Regarding the first pillar, you can consider flexible retirement — you do not have to retire as soon as you become eligible.
In the Pension Calculator, you can test different options.

Payouts from funded pension pillars

Different payout options and combinations in the second and third pillars allow you to use your accumulated savings in a way that suits you best.

Payouts from both the second and third pillars can be:

• Lifetime
• Fixed-term
• One-time or partial one-time payment

You may first make a choice for one pillar and postpone using the other pillar. You can also choose one type of payout from the second pillar and a different one from the third pillar.

EXAMPLE: How to increase your pension by “45%”?

Suppose that if Mart retired today, his first pillar pension would be 700 € per month.

• Step 1 — Mart postpones his first pillar pension by 5 years.
• Step 2 — During those 5 years, he combines part-time work income with a 500 € monthly payout from his second and third pillars. This allows him to delay starting his first pillar pension without significantly lowering his standard of living.
• Step 3 — After 5 years, Mart starts receiving a first pillar pension that is 45.05% higher — about 1,015 € per month — and can fully retire, securing a stable income for the rest of his life.

Please note that postponing retirement increases your pension in all three pillars.

The following steps explain how to withdraw money from the pillars when retiring.
 

Flexible old-age pension allows you to better manage your income and expenses, allowing you to adjust your pension according to your personal and financial needs. If you choose to retire later, your pension amount will increase. The percentages of reduction or increase are based on projections. The exact percentage of reduction or increase depends on your birth year, birth month and the time your pension is granted. The reduction or increase of the pension depends not only on the time of retirement but also on the life table of Statistics Estonia and the government bond yield of the European Central Bank. These figures are updated annually on .1 January The percentage applied at the time of granting the pension will not change in the future.

Flexible old-age pension
While receiving a flexible old-age pension, you can also continue working, meaning you can receive both your pension and wages simultaneously.

Early retirement pension
Early retirement pension is a type of pension that will be gradually phased out from 2021 onwards. Until 2025, those who wish to retire earlier will be able to choose whether they want to receive early retirement pension or flexible old-age pension.

Suspension and continuation of payments
As of 2021, you can withdraw only half of your pension each month or stop receiving it altogether, if you wish. This option is intended for those who are already receiving a pension but can manage without it or with only half of it for a certain period, allowing them to increase their future pension. The suspended part of your pension is not paid out in a lump sum later; instead, you will receive a slightly higher monthly pension for the rest of your life.

You can suspend or continue your pension once a month. To this end, you must submit an application for suspension/continuation of payment of old-age pension to the Social Insurance Board. The changes will take effect from the following calendar month. Suspension cannot be terminated retroactively.

If you retire later, your pension will be higher. The percentages of reduction or increase are based on projections. The exact percentage of reduction or increase depends on your birth year, birth month and the time your pension is granted. The reduction or increase of the pension depends not only on the time of retirement but also on the life table of Statistics Estonia and the government bond yield of the European Central Bank. These figures are updated annually on .1 January The percentage applied at the time of granting the pension will not change in the future.

If you retire later, the average pension increase in 2026 will be as follows:

• 1 year later +6.12%
• 2 years later +15.50%
• 3 years later +25.39%
• 4 years later +36.90%
• 5 years later +50.04%

The shown percentages of reduction or increase are based on projections. The exact percentage of reduction or increase depends on your birth year, birth month and the time your pension is granted.

The pension calculator is an excellent tool to help you understand how different retirement times can impact your future pension. Use the calculator to see what happens if you retire three months or three years later. The calculator provides accurate calculations and helps you make an informed decision.

Come alone or with your team for free and practical pension literacy consultation!

Pension literacy consultants organise free information sessions for institutions, teams and stakeholders. The sessions can be held online or in person, with no limit on the number of participants. We provide consulting in Estonian, English and Russian.

If you are interested, reach out to [email protected]

Our consulting service is relevant, impartial and primarily tailored for people of working age.

If you retire earlier, your pension will be smaller, and it will not increase when you reach the statutory retirement age. The reduction applies for life.

According to 2026 calculations, the average reduction is as follows:

1 year earlier → –7.17%
2 years earlier → –13.78%
3 years earlier → –19.88%
4 years earlier → –25.50%
5 years earlier → –30.67%

Flexible retirement is possible up to five years before the general retirement age and at any time after reaching retirement age.
To qualify, you must have at least 15 years of pensionable service earned in Estonia.

Higher service requirement when retiring earlier

The earlier you wish to retire, the longer your pensionable service must be:

Up to 1 year earlier → at least 20 years of pensionable service
Up to 2 years earlier → at least 25 years
Up to 3 years earlier → at least 30 years
Up to 4 years earlier → at least 35 years
Up to 5 years earlier → at least 40 years

Example (based on 2026 average reduction percentages)

If your first pillar pension would be 700 € per month, retiring earlier would reduce it as follows:

1 year earlier → 700 € × (1 − 0.0717) ≈ 650 €
2 years earlier → 700 € × (1 − 0.1378) ≈ 604 €
3 years earlier → 700 € × (1 − 0.1988) ≈ 561 €
4 years earlier → 700 € × (1 − 0.2550) ≈ 522 €
5 years earlier → 700 € × (1 − 0.3067) ≈ 485 €

Please note: If you retire earlier, your pension will remain smaller for the rest of your life. It will not automatically increase once you reach the statutory retirement age.

Try it yourself

Test early retirement using your own data:
open the Pension Calculator and move the pension start date 1–5 years earlier to see the exact amounts based on your year of birth and pensionable service.

Carefully consider your strategy for withdrawing your pension savings, taking into account both short-term and long-term needs and risks. In many cases, it is wiser to withdraw pension savings as regular payments, which ensures a stable income and allows for better financial planning in the future. Regular payouts also help maintain financial discipline and may reduce the income tax burden. Choose a withdrawal strategy that provides you with the best financial security in the future.

When considering a lump-sum withdrawal, also take into account the following:

• Inflation, because if you withdraw your entire pension savings at once, inflation may reduce its purchasing power over time. Holding money for a long period may mean that in the future it will buy fewer goods and services than today.
• Loss of investment opportunities, because regular withdrawals allow the remaining savings to stay invested and continue growing. If you withdraw the money at once, you lose the opportunity to earn additional investment returns.
• Lack of long-term security, because regular payments (especially a lifelong pension) ensure a stable income throughout retirement or at least for a long period (in the case of a fixed-term pension). Withdrawing the entire amount at once removes this security.
• Unexpected expenses, because having a long-term pension plan helps manage unexpected costs, such as healthcare expenses or home repairs. If you withdraw all your savings at once, covering such costs later may become more difficult. For example, when choosing a fixed-term pension, it is still possible to withdraw an additional larger amount if needed.
• Your own financial discipline, because receiving a large lump sum may tempt unnecessary spending and increase the risk of falling victim to fraud.
• Income tax obligations, because lump-sum withdrawals are subject to income tax (10% during retirement age or up to five years before retirement). A lifelong pension and a fixed-term pension distributed over at least the average remaining life expectancy are exempt from income tax.

There is considerable flexibility and options when it comes to withdrawing accumulated pension funds from both pillars. Therefore, think carefully before deciding to withdraw all your accumulated pension money at once. You can withdraw the accumulated amount either as regular pension payments or as lump sums of varying sizes if larger amounts are needed. At the same time, the money in your pension fund continues to earn returns and compound interest.

The average retirement period is 18 years, but it can be even longer if you retire five years early. However, if you just keep the money withdrawn from the pillar in your account for 18 years or more, you will miss out on potential returns and be negatively affected by inflation.

Reasons why it is not wise to keep your pension money in your bank account

• Rate or return and compound interest: the money in your pension fund continues to earn returns and compound interest. The average retirement period is 18 years, but it can be even longer if you retire five years early. However, if you just keep the money withdrawn from the pillar in your account for 18 years or more, you will miss out on potential returns and be negatively affected by inflation.
• Impact of inflation: keeping money in a bank account over a longer period can lead to a decrease in purchasing power due to inflation. Having your money invested in a pension fund helps to reduce the impact of inflation because it may yield higher returns.
• Long-term security: Regular pension payments ensure a stable income throughout your retirement. If you withdraw all the money at once and hold it in your bank account, you could lose your sense of security and financial stability.
• Investment opportunities: continuous regular payments allow you to continue investing and growing your remaining funds. If you withdraw all your money at once and keep it in your bank account, you lose the opportunity to earn additional income from your investments.

Funded pension options

The funded pension option is available for both II pillar and III pillar. This allows you to withdraw money regularly while continuing to invest the remainder in a pension fund, which helps to maintain and grow your pension savings.

EXAMPLE:
Scenario A: I leave €10,000 invested in a fund with a 5% annual return. After 10 years, the amount grows to approximately €16,289. After accounting for the assumed impact of inflation (3% per year) and the income tax applied when withdrawing the money, the real value of the money in the fund is approximately €12,000.

Scenario B: I withdraw the money as a lump sum. I immediately lose 10% to income tax, and in addition the purchasing power of the money simply sitting in a deposit decreases due to 3% inflation, reducing its value by about €2,000 over 10 years. The real value of the money after 10 years is approximately €6,700.

Joining a pension pillar at any time is beneficial, but starting earlier maximises the advantages of compound interest and tax incentives. Contributing to both the II pillar and III pillar offers a tax-efficient way to prepare for retirement. Tax incentives make it an appealing option for anyone looking to increase their income. While accumulating over the long term leads to a larger pension, even short-term contributions can be beneficial, offering additional income during retirement. However, compared to long-term accumulation, compound interest does not have enough time to work effectively in your favour with short-term contributions.

It is advisable to join the II pillar as long as you are working, paying social tax and are not subject to restrictions on rejoining the II pillar in relation to withdrawing all the money from the II pillar (ie you cannot rejoin the II pillar for 10 years).

Joining the III pillar is voluntary and can be done at any time.

It is important to note that the earlier you join, the more time you have to grow your pension assets and use the tax incentives.

As of 1 January 2023, all pensions, including the I, II and III pillars, are subject to seizure. This means that payments made to a debtor from both the state pension and mandatory and voluntary pension funds may be seized to cover debts. It is important to understand that your pension assets can be subject to seizure and that this can affect your financial situation if you have outstanding commitments.

I pillar

This means that if a debtor is granted old-age pension or another I pillar pension, it may be subject to seizure to cover debts.

II and III pillar

This means that payments from the mandatory pension fund (II pillar) and voluntary pension fund (III pillar) may also be subject to seizure if the debtor has outstanding commitments.