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What happens if you essentially waste all the money? Will you be left totally without pension or will others foot the bill?
by sharpneli 4y ago
What happens if you essentially waste all the money? Will you be left totally without pension or will others foot the bill?
- tauntz 4y agoThe pension system in Estonia has 3 tiers. Everyone has the 1st, basic tier ("State pension"). Then there's the 2nd tier called the "Mandatory funded pension" which is the one that held the most savings and was "freed" now and then there's the 3rd one called "Supplementary funded pension" which has always been "free" as in you can stuff money in there and you can take it out as well. People who blew their 2nd tier on a new car/TV/vacation/paying existing loans will still have the 1st tier but that will only guarantee a pension that's big enough that you won't directly starve but it's not big enough to actually let you live either.
- daeroth 4y agoYour pension would be substantially smaller. Technically the pension fund consists of 3 parts: 1) Shared pool of funds. Current workforce pays into the pool and current pensioners get payouts from this pool. You can't liquidate this part of your fund as there is no part that is fully "yours" 2) Individual pool - part of your salary automatically gets put into this pool and invested into the pension fund of your choosing. THIS is the part that people can now liquidate before they reach the pension age 3) Individual pool of extra deposits - You can choose to add money into this pool and incest it in a pension fund. If you withdraw funds during your pension age then no gains tax is applied on the profits. But you can liquidate the fund at any point as long as you pay the gains tax. So these citizens/residents will only be left with the first option as their pension payments.
- jdasdf 4y agoThen you suffer the consequences of your own choices.