The Ministry of Social Affairs has proposed the Ministry of Finance amend its pension reform bill to limit the amount of money which can be withdrawn from the so-called second pillar fund. The draft bill was issued last Wednesday, with interested parties given a week to submit feedback, comments, suggestions etc. by midnight this Wednesday, Nov. 6.

The social affairs ministry, a key player and part of the same coalition government, had not submitted its comments as of Wednesday afternoon, but now it has.

The social affairs ministry suggests limiting the amount which can be withdrawn to one third of the fund, once membership of the second pillar, which deals with employee contributions, has been made voluntary where it was mandatory for most wage earners since 2010.

Either this one third requirement, which constitutes the individual’s own contributions at 2 per cent of earnings, could be retrieved, leaving the remaining two thirds, added by the state from the social tax, could be the only component which could be withdrawn before retirement age, or alternatively the entire sum could be withdrawn no earlier than 10 years before retirement.

Critics of the reforms say that large numbers of people withdrawing from the second pillar could cause a brief economic boost, followed by a slowdown, as well as leading to smaller overall pension funds with an aging population, and other issues.

“The bill, which is in the process of being approved, will allow people to use the part of the state’s contribution from social tax for other purposes as well,” social affairs minister Tanel Kiik (Centre) said of the proposal.

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