Pensionable age is determined based on when you started accumulating your III pillar pension:

Before 2021:

If you have voluntary pension fund units that you acquired before 2021 or if you concluded a supplementary funded pension insurance contract before 2021, you can start receiving your III pillar pension from age 55. For example, if you are 55 years old and you have III pillar voluntary pension fund units or a supplementary funded pension insurance contract concluded before 2021, you can start receiving III pillar pension.

After 2021:

Those who started accumulating their III pillar pension in 2021 or later are subject to the standard pensionable age minus five years. This means that if your pensionable age is 65 years, you can start receiving III pillar pension from age 60. For example, if you are 60 years old and the pensionable age that applies to you is 65 years. Since you started accumulating III pillar pension in 2021 or later, you can now start receiving III pillar pension.

There are several options for receiving a pension from the III pillar:

• Lifelong (indefinite) III pillar pension

A lifelong pension means that you conclude a contract with an insurance company. Under the contract, you transfer part or all of your accumulated III pillar funds to the insurance company and receive a monthly pension paid by the insurer for the rest of your life — regardless of how long you live.

Read more in the section „Important to know concerning this step: What is a pension of unspecified term or lifetime III pillar pension?“

• Fixed-term III pillar pension

A fixed-term pension means that you determine the period during retirement for which regular pension payments are made from your III pillar.

Read more in the section „Important to know concerning this step: What is fixed-term III pillar pension?“

1. Lump-sum payment from the III pillar

If the accumulated amount is small or if you already have sufficient regular income from other sources, you may withdraw the funds as a lump sum or in parts.

Such payments are subject to 10% income tax.

Read more in the section „Important to know concerning this step: How to withdraw money from the III pillar as a lump-sum payment in retirement?“

Lifelong (indefinite) pension from the III pillar

A lifelong III pillar pension is a pension paid from your accumulated III pillar savings for the rest of your life. After retiring, you receive a monthly payment that continues until the end of your life. A lifelong pension provides financial security by ensuring stable income in old age.

A lifelong pension from the III pillar is provided as a separate service by an insurance company.

What should you keep in mind?

To receive a lifelong pension, you must conclude a pension contract with an insurance company.

When concluding the contract, part or all of your accumulated III pillar assets are transferred to the insurance company.

The amount of the lifelong pension is calculated by the insurance company using a special annuity formula.

The size of the lifelong pension payment depends on:

• your age at the time of concluding the contract,
• the amount transferred from your III pillar,
• the average remaining life expectancy at retirement age (according to Statistics Estonia data for 2025, 18.8 years),
• the terms and costs of the insurance contract (administrative fees, risk fees, etc.).

By choosing a lifelong pension, you transfer your III pillar assets to the insurance company. This means that the transferred assets are no longer inheritable. The detailed conditions are set out in the insurance contract.

A lifelong pension provides financial security through stable lifetime income, but the transferred assets no longer earn investment returns for you, and insurance company fees apply to the payments.

Taxation

A lifelong pension is exempt from income tax. However, the costs specified in the insurance contract apply.

Insurance contract with a guarantee period

You may conclude a pension contract with a guarantee period. This ensures that, in the event of your death, payments continue to a person named in the contract until the end of the guarantee period. This person is called the beneficiary.

If you choose a guarantee period, the monthly pension amount will be somewhat lower compared to a contract without a guarantee period. The longer the guarantee period, the greater the difference.

If the amount you wish to use for concluding a lifelong pension contract is too small, the insurance company may refuse to conclude the contract.
 

A fixed-term III pillar pension is a pension payment made from the assets accumulated in your voluntary pension fund (III pillar) for a predetermined period of time.

Unlike a lifelong pension, which is paid until the end of the pensioner’s life, a fixed-term pension lasts only for the agreed period, for example 10, 15 or 20 years.

The purpose of a fixed-term pension is to provide regular payments for a limited period, offering flexibility and potentially higher monthly payments compared to a lifelong pension.

There are two types of fixed-term pension:

1. Fixed-term fund pension
   A fixed-term fund pension is paid from your III pillar pension fund.
   
   If you have units in several pension funds, units will be redeemed from all funds when payments are made. The pension is paid until the end of the term you have chosen.
   
   Read more in the section „Important to know concerning this step: What is a fixed-term pension from the III pillar (supplementary fund pension)?“
2. Fixed-term pension from an insurance company
   To receive a fixed-term pension from an insurance company, you must conclude an insurance contract.
   
   After concluding the contract, the Pension Centre transfers your accumulated pension assets to the insurance company, and the insurance company pays you the pension until the agreed term ends.
   
   Read more in the section „Important to know concerning this step: What is a fixed-term pension contract with an insurance company?“

A supplementary fund pension is a fixed-term pension paid from voluntary III pillar pension funds.

If you have units in several pension funds, units will be redeemed from all funds when payments are made.

How to receive a fund pension?

To receive pension payments (fund pension) from the III pillar, you must submit an application to open a fund pension. The application can be submitted, for example, through the Pension Centre’s self-service portal.

What should you keep in mind?

To receive a fixed-term fund pension, you must submit an application to open the fund pension. The application can be submitted in the Pension Centre self-service portal (URL), at a bank, or to a pension fund manager (provided the service provider has account manager status).

• If you choose monthly payments, the first payment will be made in the calendar month following the submission of the application.
• You can choose to receive payments:
  once a month,
  once a quarter, or
  once a year.
• When choosing the payment period, you may:
• select the recommended duration based on your age and average remaining life expectancy, or
• determine the period yourself.
• The term must be set in full years (for example 20, 17 or 10 years). The longer the term, the longer the pension is paid, but the smaller the payment amount. The minimum term is 1 year.
• If you acquire new pension fund units after submitting your application, no additional action is required. The new units will automatically be taken into account when calculating the next payment.
• You may stop the fund pension at any time. After stopping it, you may agree on new terms or choose another payout method (lifelong pension, fixed-term pension from an insurance company, or full/partial lump-sum payment).

Taxation (simple rule)

• If you distribute payments in retirement over at least the average remaining life expectancy (approximately 18–19 years) or a longer period, III pillar fixed-term payments are tax-free (0%).
• If you choose a shorter period (for example 10 or 15 years), 10% income tax will be withheld from the payments.

A long fixed-term pension should not be feared.

If you need a larger amount during the period, you may withdraw it separately and continue receiving the fixed-term pension afterwards. However, this will reduce the size of future payments.

You may also stop the fixed-term pension at any time and choose another payout option.

A fixed-term pension paid by an insurance company is a way of withdrawing your III pillar funds by concluding a contract with an insurance company. Under the contract, you transfer part or all of your accumulated III pillar assets to the insurance company and receive a monthly pension from the insurer for the period specified in the contract.

To receive a fixed-term pension from an insurance undertaking, you must enter into an insurance contract. Once you have concluded a fixed-term pension contract, the Estonian Pension Centre will transfer the assets accumulated in your III pillar to the insurance undertaking. The insurance undertaking will pay you the pension until the maturity date.

When entering into an insurance contract, you may:

• use all the assets accumulated in your III pillar, or
• conclude a fixed-term pension contract for a smaller amount.

The remaining III pillar assets can be withdrawn in other ways: 

• in the form of funded pension from pension funds;
• as a lump sum;   
• as a partial lump sum.

If you only used part of your accumulated III pillar assets to conclude the fixed-term pension contract, you can use the remaining assets in the pension fund as well as the assets added to the III pillar to:

• conclude a new pension contract,
• choose funded pension, or
• withdraw the remaining money as lump-sum payment(s).

If you wish, you can also transfer the assets to the previously chosen insurance undertaking and thus increase the amount of your payments. To specify the terms of the fixed-term pension contact and enter into it, you need to contact the insurance undertaking.

You can conclude a fixed-term pension contract with the following insurance undertaking:
Compensa Life Vienna Insurance Group SE

Taxation

How is a fixed-term pension paid under an insurance contract taxed?

The income tax rule for a fixed-term pension paid by an insurance company is the same as for a fund pension — 10%.

• If the contractual payment period is at least equal to the average remaining life expectancy (as of 2024, at least 19 years) → Income tax = 0%
• If the contractual payment period is shorter than 19 years → Income tax = 10% (applies to each payment)
   

If you are at retirement age or less than 5 years away from reaching retirement age, you may withdraw your accumulated funds either as a lump-sum payment or as partial payments.

A lump-sum payment from the III pillar offers a flexible opportunity to gain access to a larger sum of your pension assets immediately. While the application process is easy, it is also important to consider the risks of taxation and loss of long-term financial security. A lump-sum payment allows you to withdraw all or part of your pension assets accumulated in the III pillar at once. .

There are no restrictions on withdrawals from the III pillar: you can withdraw your accumulated funds at any time and in any amount that suits you. To this end, you must submit an application for payment.
You can submit the application in:

• the internet bank
• the ‘My pension account’ section of the website of the Estonian Pension Centre

Lump-sum payments from the III pillar are subject to income tax, with a tax rate of 10% applied to payments made at pensionable age.

Note! If you have been declared to have no work ability, your pension is exempt from income tax, regardless of how your pension is paid.

You can request an income tax refund on your III pillar pension insurance payments by declaring them in your income tax return. The tax incentive applies to up to 15% of your annual gross income or up to 6,000 euros per year. Applying for an income tax refund is straightforward and can be done through the e-service of the Estonian Tax and Customs Board. You can apply for income tax refund only if you have previously paid income tax during the year.

How to apply for income tax refund?

Make contributions to your III pillar

First, make contributions to your III pillar pension account. Make sure your contributions do not exceed 15% of your annual gross income or 6,000 euros.

Submit your income tax return

Next year, when the Estonian Tax and Customs Board opens the income tax return submission period, log in to e-MTA and complete your income tax return. Your III pillar contributions are automatically included in the pre-filled tax return.

You receive an income tax refund

After your income tax return has been submitted and reviewed, the Estonian Tax and Customs Board refunds you the income tax amount corresponding to the tax incentive received on III pillar contributions. You can only claim an income tax refund if you have paid income tax.

Example

If you have an annual gross income of €20,000 and make contributions to the III pillar in the amount of €3,000, you will receive a 22% income tax refund of €600 on the €3,000 when you file your income tax return next year.

In general, a reasonable and tax-efficient choice is to withdraw III pillar pension payments on a fixed-term basis — that is, to choose a fixed-term pension where the payment period is at least equal to the expected remaining lifetime (approximately 19 years) or longer.

By choosing this option, you allow your III pillar assets to remain invested in the fund and withdraw money in retirement as regular monthly payments. The payments are calculated so that the assets last for the chosen period (for example, 20 years).

When making your decision, it is important to consider:

• how much you have accumulated in the III pillar,
• over what period you plan to distribute the payments.

Reasons:

• Flexible (you can adjust the amount and make additional withdrawals if needed).
• Compound interest continues to work, as the funds remain invested.
• Reasonable taxation (regular payments are more tax-efficient than a lump-sum withdrawal). No additional payout fees apply.
• Good predictability and transparency (fixed payment schedule; can be combined with I pillar pension and other income sources).
• The remaining funds in the III pillar remain inheritable.

Important — be aware of the risks:

• With a fixed-term pension, payments end once the chosen period expires. After that, your monthly income may decrease significantly.
• Your funds remain invested in the pension fund. Although this may increase returns, it also involves risks (such as fund reliability and fluctuations in investment performance).

Fixed-term pensions are exempt from income tax if they are set for the recommended term, ie for a period equal to or longer than the average life expectancy.

If you have been declared to have no work ability, your pension is exempt from income tax, regardless of how your pension is paid.

Tax rate 10%

Pensions with a duration shorter than the recommended term and lump-sum payments made at pensionable age or within five years of reaching pensionable age are subject to a 10% income tax rate. The same rate also applies to persons aged 55 and over who held units of a voluntary pension fund or concluded a pension contract before 2021.

Tax rate 22%

If you withdraw the supplementary funded pension before you are eligible, and if less than five years have passed since you concluded your pension contract or first acquired units, the payments are subject to 22% income tax.

In the case of inheritance, if the inherited pension fund units are redeemed from the pension fund and the successor receives the payment in cash, the payment is subject to 22% income tax.

Lifetime pension is exempt from income tax.