The more investors we have at Tuleva, the less we all pay in fees. This is the essence of Tuleva’s model. Our assets under management have now surpassed the one billion euro mark, enabling us to lower fund fees once again. Starting November 14, fees across all Tuleva funds will be reduced to 0.32%.
Over the past year, Tuleva has experienced remarkable growth. Our funds now manage over one billion euros – nearly 70% more than a year ago. This growth is due in part to strong financial markets and a notable rise in stock prices. At the same time, investors have contributed an additional 192 million euros to our funds in the past year.
We lower fees as soon as possible
Investing is a volume-based business, and as the assets under our management grow, the costs per investor decrease. Every new euro added to Tuleva funds helps reduce fees for everyone.
Many Tuleva investors have already increased their contributions to the second pillar, giving us hope for continued growth in the future. This enables us to lower fees while maintaining a sufficient buffer to pay member bonuses and weather potential market downturns. Starting November 14, we are reducing fees across all Tuleva funds to 0.32%.
The chart below illustrates the downward trend in fees for Tuleva’s two largest funds. (1)
Tuleva members benefit further because we return a portion of our fees to ourselves. Each year, every member receives a 0.05% rebate of the value of their savings in Tuleva’s second and third pillar funds.
The more people save together with us, the more confidently fees will drop for all Estonian people
Lowering fees has a small impact on the average Tuleva saver, as fees decrease by only a few percentage points. It’s about the principle. Tuleva was created to increase competition among pension funds. We lower fees almost every year to make saving for retirement more affordable for everyone.
Lowering our fees does not make any single Tuleva fund the cheapest on the market. However, we are confident that all of our funds are good funds, as Tuleva remains the fund manager with the lowest average fees in Estonia by a significant margin. (2)
In the Tuleva model, everyone covers their own costs – no one else pays for your savings, and you don’t pay for someone else’s. In contrast, banks offer both low-fee funds and very high-fee funds, with the latter subsidizing the low-cost options.
The chart below shows the asset-weighted average ongoing fees of II pillar pension funds at pension fund managers as of 8th Nov 2024.
The less you pay in fees, the more you keep yourself
While pension fund fees may seem negligible, their impact over the long term is significant. Tuleva investors understand that saving on fees means having more wealth in the future.
One in five people who recently transferred their second pillar savings to Tuleva previously saved in the LHV L Fund. On average, those transferring from this fund had accumulated €14,500 in their second pillar. In 2024, they would pay a fee of 1.25%, amounting to €182. By moving their pension savings to Tuleva, they would instead pay just €46 – four times less. It’s human nature to postpone important decisions, but when it comes to pension savings, waiting truly costs money.
This is not some distant future projection or theoretical figure; it’s real savings. It’s like switching your family’s expensive mobile plans to more affordable ones – a small effort that saves money and generates returns for decades. You can calculate the impact of fees on your savings using our pension calculator.
Tuleva lowers fees because we can
We are not pressured by the government or competitors to lower fees. The owners of Tuleva are the same people growing their wealth in our funds, and it is in their interest to keep costs under control. Thanks to this, other Tuleva investors can also rest assured that saving with Tuleva will become even more affordable in the future. As more people save in our funds, we can continue lowering fees. The larger our fund size, the lower the costs for everyone.
Initially, Tuleva’s goal was to bring low-cost index funds to Estonia. Now we know that our greatest contribution is helping more people save wisely and consistently. That’s why we aim to cut through the noise and misleading advertisements to help people make informed decisions.
Moreover, the larger we grow, the stronger our voice in advocating for investors. Every euro saved strengthens our ability to push for a fair and modern pension system in Estonia.
See how much you’re paying in fees on your pension savings.
The fees for the Tuleva World Stocks Pension Fund will decrease from 0.35% to 0.32%, the fees for the Tuleva World Bonds Pension Fund will decrease from 0.38% to 0.32%, and the fees for the Tuleva Third Pillar Pension Fund will decrease from 0.33% to 0.32%.
The second pillar is your asset: How to get the most benefit from It?
Kristi Saare and Tõnu Pekk have helped cut through the clutter of information about pension pillar reforms. Below you’ll find a summary that outlines how to withdraw from the second pillar and how to maximize its benefits.
The second pillar is truly your asset
While the second pillar was always legally your own, many didn’t feel it was theirs. Access to these assets was restricted, details on returns and fees were opaque, and there were no choices. Unsurprisingly, half of the Estonian population knew very little about their second pillar. However, those who continue to save in the second pillar until retirement age now stand to gain the most.
Thanks to recent pension reforms, the second pillar funds are undeniably yours. At any moment, you can submit an application to transfer the accumulated money to your bank account or direct it to your personal pension investment account, where you can buy stocks or funds by your choice. You can monitor on your pension account how much income this asset has generated for you and how much in fees is deducted from your investment each year. Essentially, the second pillar now operates just like any other financial account you might hold.
Gaining the most from the second pillar by continuing to save
The second pillar isn’t a ticket to paradise, but as Tuleva founder Jaak Roosaare puts it—it forms the foundation of a strong financial house. A great feature of the second pillar is that it’s already set up for you, continuously accumulating wealth every month without requiring any active effort on your part. Those who maintain their contributions until retirement age reap substantial benefits. Upon retiring, you’re no longer obliged to hand over the accumulated assets to an insurance company. Instead, you enjoy flexible access to your funds.
The law now allows individuals of pre-retirement age (currently 60 years old) towithdraw as much money as they need all at once. This can be particularly useful for significant expenses like insulating your home’s facade or covering essential medical costs. Withdrawals at this stage are subject to a reduced tax rate of 10%. Alternatively, you can opt for a fund pension, where payments are gradually disbursed to you while the remainder continues to earn returns in the pension fund. If this fund pension extends over a sufficiently long period, the tax on it can be zero. Ultimately, any money you don’t use in your lifetime will be passed on to your heirs.
The high cost of accessing second pillar capital prematurely
We’ve received numerous inquiries about whether it might be wise to withdraw from the second pillar to buy an apartment, forest land, renovate, settle debts, and so on. Before you make such a withdrawal to finance your dreams or business ideas, consider the cost. Generally, tapping into your second pillar funds before retirement age is an expensive decision.
For example, if you are currently 35 years old and earning the average salary in Estonia, you’ve likely accumulated just over 10,000 euros in your second pillar. Withdrawing these funds now would mean the state withholds 2,000 euros in taxes, and you would receive 8,000 euros. This might cover a thorough renovation of your kitchen or the purchase of a hectare of middle-aged forest land. However, if you delay this withdrawal, your second pillar funds could grow to about 35,000 euros in ten years. With this larger amount, you could undertake more extensive renovations or purchase more land—even if inflation increases prices in the interim. Conversely, the cost of that kitchen renovation or hectare of forest land would be substantially higher than it appears today.
What’s the rush? There’s no need to act immediately.
Remember, the chorus of intermediaries and advisors often urges you to ‘do something!’ However, when it comes to investments, sometimes the best action is inaction. Banks and financial institutions typically profit when you make moves with your money. The pension reform didn’t set any deadlines that require immediate action. You can withdraw assets or switch funds anytime.
(1) For this example, I am assuming that your salary grows by 3% per year and your pension fund’s return is 5% per year. If inflation is 2% per year, as it has been on average over the last 10 years, then 35,000 euros would be worth 28,700 euros in today’s money. If it’s 4% per year, then it would be 23,600 euros.
What is a membership bonus?
Everyone will benefit from Tuleva, but only members will earn a membership bonus that will increase their stake in the membership capital of our mutual company. What is it, and how does it work?
Tuleva’s purpose is to make its members richer. We have two main goals to that end, and everyone in Estonia will benefit from both.
1. Better investment products
Tuleva was born of frustration. Existing pension funds were good business for the banks but inferior investment products for people. The first members of Tuleva came together and made their own second pillar pension funds at many times lower costs. The new members then helped start our own third pillar fund. It was a natural step – the third pillar is a clever way to save money because you will immediately win 20% thanks to the tax benefit.
2. Better laws
The laws have a huge impact on how much we receive of every euro saved and how much is spent on commissions. We have already achieved a lot.
The Estonian Parliament took the first steps to gradually reduce the fees for banks’ pension funds.
The Ministry of Finance agreed that the automatic selection for young people must be proven to be smart: a low-cost fund investing in equities.
Also, the pension reform has taken effect now, and people can use their second pillar assets more flexibly. People no longer have to spend money on insurance companies as they retire.
Tuleva members participate in the distribution of profits
Everyone can save money in the pension funds that Tuleva members made for themselves. Membership is optional; switching the pension fund is free of charge and takes just a few minutes. A smarter pension system that puts the people’s interests first, rather than that of banks and insurance companies, will benefit everyone.
To make the idea of Tuleva come true, each Tuleva member, the founders and the first entrants as well as newcomers, have contributed a one-off membership fee. It is used on product development and analysing the problems and solutions of the pension system. The membership fee is 125 euros.
Only members of the Tuleva association earn a membership bonus every year. How is it calculated?
At the end of the year, we calculate how many Tuleva pension fund units each Tuleva member had on average during the year. We multiply the value of the units by 0.05% and transfer the resulting amount to the member’s personal capital account with the Tuleva association. Therefore, the membership bonus is very small at first but increases as our pension assets grow.
Members’ capital accounts also record the voluntary capital contributions that the association raised to meet the initial capital required by law of our mutual management company. So far, we have only raised voluntary capital contributions twice: first when creating the Tuleva second pillar and later the third pillar.
The capital accounts of all members together constitute Tuleva’s membership capital. Like a share in a public limited company, a member’s proportional share in the membership capital of Tuleva Commercial Association entitles them to a share in the profits. As Tuleva develops, our funds grow, and we launch new investment products, the association earns profits, and we distribute the profits among the members, as agreed in the articles of association.
Therefore, the current value of each member’s capital account consists of the voluntary capital contribution, the membership bonus and a proportionate share of retained earnings (or losses).
Every five years, Tuleva members decide at the general meeting whether to pay out the profit accumulated in the capital accounts or to keep it invested.
As with any business revenue, it depends on how well our association is doing. The founders of Tuleva are convinced that the membership fee more than pays for itself. Acting strategically, we are building a sustainable and successful fintech company.
If you are a member of Tuleva, you can use the online app to check your share in the association’s membership capital: pension.tuleva.ee. If you haven’t joined us yet, do it now!
How do we use membership fees?
Membership fees are used to develop the Association and to represent the interests of members. The fees of our first members were used to raise the fund’s initial capital, introduce Tuleva to the general public, and make preparations to start the fund, including application for an activity license from the Financial Inspectorate. From this point forward, membership fees will be used for the following activities:
Membership community management and communication
Development of Tuleva’s web page, blog, and other informational channels
The creation of proposals and influence analysis to improve the Estonian pension system, in cooperation with the Ministry of Finance and other state organizations
Development of Tuleva’s IT systems
Preparation and analysis of voluntary savings products and Third Pillar options
Your joining fee helps to bring well thought ideas with big impact to decision-makers.
Every euro saved gives a Swede almost a third higher pension than the same amount saved by Estonians. Estonia needs a smarter and measurable pension strategy.
As the first and only association representing pension savers, Tuleva is a credible partner for Ministry of Finance and state legislative bodies. We participate in pension strategy discussions, where next to the officials only banks and insurance companies used to be represented.
We help to make better laws. The laws that protect the people. The laws that maximize our profits from our, not banks’ savings.
We have our first achievements. For example
On Tuleva’s initiative, people in Estonia saved only during last year 1.5 million euros, because the fund managers are no longer allowed to charge high fees for changing the pension fund.
We sent a petition to parliament, signed by 2300 people, that proposes to reform how people can use their II pillar savings.
We do not organise demonstrations or spread random complaints. We are direct, we analyse issues and offer constructive solutions.
Tuleva is a social company with a goal to earn profit for its members.
Tuleva’s main principle is that people themselves save money for their future, using contemporary technologies and bypassing unnecessary middlemen and costs as much as possible.
Every year, each member who has transferred their second or third pillar to Tuleva pension funds, earns a member bonus. Member bonus is very small at first, but it will grow together with member’s pension assets. Bonus is transferred to your personal capital account at Tuleva. This is your ownership stake in Tuleva capital and this stake can earn you additional profit.
When Tuleva grows, our funds under management grow and we add new products to our offering, then the association will earn profit. The profit is then divided among members, as set in our Articles of Association.
As always with profit from entrepreneurship – this depends how well our venture is doing. The founders are convinced, that the 125-euro joining fee pays for itself many times over. But we do not give promises.
How is member bonus calculated?
At the end of each year
We calculate how many pension fund units each member had on average during the year in euros
Multiply this by 0,05% and transfer the resulting amount to member’s capital account
Every 5 years, members annual meeting decides whether to pay our accumulated profit as a dividend or keep it invested.
Tuleva is for people who care.
Every member has a vote on annual general meeting and has a right to elect and be elected to Tuleva’s board of directors and other supervisory bodies. This is the official part and it is very important.
Every day we share our ideas and experience among Tuleva members in our Facebook group, e-mail, phone and working groups. Among our community, there are people who care about the society and have very different skills. Many are ready to take responsibility for ensuring us a better future.
Tuleva team listens very carefully to our members and uses their ideas for making Tuleva better. We are only starting and believe that the power of thousands of smart people can be used for increasing our common good.
How does the calculator work?
Tax benefit is simple: the government pays you back the income tax on your third pillar contributions. Tax benefit applies to contributions that do not exceed 15% of your gross income or 6000 euros, whichever is smaller.
Your maximum contribution amount to third pillar is thus 15% x gross annual income. If your annual income is over 3333 euros per month (gross), then you can contribute to third pillar 6000 euros.
Tax benefit equals 20% x your third pillar contributions.
NB! Your tax benefit cannot be bigger than the income tax you have paid during the year. Thus: if your gross income is less than 614 euros a month, then your maximum contribution is less than 15% of your income. More precisely – your maximum contribution per month is then: gross monthly income x 0.964 – 500.
With less than 519 euro monthly income you are not paying income tax most likely and hence you do not have any tax benefit in contributing to third pillar.
Check the e-tax board to see how much gross income you have received this year
In the menu on the left, select Registers and inquiries -> My income. You can see the gross income earned this year on the basis of the data that payers have submitted to the tax office to date. Check whether income tax has been withheld from the payment amount or not, according to the payer. To do this, click on the name of the person making the payment, and in the last column of the summary information, you will see information about the withheld income tax.
NB! It is possible that your employer(s) have not yet declared the salary data for the last month(s) of the year. You can check this by clicking on the name of each payer.
If you know that income is still coming to your account this year, add it yourself.
Please note that all income that reaches your account this year will be included in the calculation for this year (if the December salary is received in January, it will be included in the next year’s income calculation).
You can also add income that you plan to declare in the income tax return this year: rental income, interest paid by crowdfunding portals, income from the transfer of securities or other property.
Don’t worry if you don’t know the exact amount of your annual gross income today. Calculate the approximate amount and then find the optimal third pillar money placement with the calculator. If the actual annual income turns out to be higher than expected, your contribution will simply be slightly below the income tax allowance limit. Nothing terrible will happen even if you put a little more than the tax credit limit in the third pillar. The law does not prohibit it – if you exceed the limit, you simply cannot get the income tax back.
