[Updated in 2024] How to make the most of your third pillar pension?

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The third pillar is an excellent way to save for your future. It offers a simple and automatic investment option where you can invest your money in broad-based index funds. In addition, the Estonian state provides support through an income tax rebate on the amount you save.

Thanks to the tax rebate, the third pillar has become increasingly popular. The Tuleva Third Pillar Pension Fund is the largest third pillar pension fund in Estonia, with more than 57,000 pension savers and a total volume of over 200 million euros.

Kristi Saare, Chair of Tuleva’s Supervisory Board, and Jekaterina Tint, an investor and Tuleva member, have created a summary on how to calculate your maximum tax-free third pillar contribution.

It is important to note that the income tax refund on third pillar pension contributions is calculated based on the calendar year. You can receive an income tax refund of up to 15% of your gross income, with a maximum limit of 6,000 euros per year. The timing and frequency of your contributions to the pillar do not matter. Therefore, you can calculate your total income for the year at any point, including towards the end of the year, and make contributions for the entire year.

What counts as income for the purposes of third pillar contributions?

  • Any income on which you have paid income tax as an individual is considered income, including:
  • Wages and bonuses (including wages and salaries earned abroad that you declare in section 8.1 of your income tax return)
  • Parental benefit, maternity benefit
  • Unemployment insurance benefit, sickness benefit, redundancy benefit
  • Business income, investment income, interest income
  • Rental income, royalties, dividends subject to 7% income tax
  • Pensions, scholarships, awards and benefits subject to income tax

However, the following do not count as income for the purposes of third pillar contributions:

  • Business income subject to simplified taxation (business account)
  • Wages and salaries earned abroad and dividends exempt from tax in Estonia (section 8.8 of your income tax return)
  • Benefits on which no income tax has been paid (e.g. monthly family benefit

Tax refunds

You can find all the information on income paid out and declared under TSD (declaration of income and social tax, unemployment insurance premiums, and contributions to mandatory funded pension) in the e-MTA (Registers and inquiries > My income). Any income that you have to manually include in your return (e.g. investment income) will require your own calculation. If your salary is fixed on a monthly basis, the easiest way is to use the income tax calculator on the Tuleva website.

Income accounting follows a cash-based system, meaning you need to report when the income reaches your bank account. If your December salary reaches your account in December, it will be included in the 2024 calendar year. However, if it is received in January, it will be included in the 2025 calendar year.

You should pay close attention to your income situation in the following circumstances:

  • Your annual income is not stable (e.g. performance fees, bonuses).
  • You have a period without income during the year (parental leave, unemployment).
  • Your annual income is below 7,848 euros.
  • You have multiple additional tax exemptions (e.g. training expenses).
  • You have reached or will reach pension age this year and your annual income is less than 9,312 euros.

To be eligible for a third-pillar income tax refund, it is necessary to have paid a sufficient amount of income tax during the year to generate a refundable amount.

If you exceed the limit on annual contributions to the third pillar, you will not receive a tax refund on the amount that exceeds the limit. However, you can still withdraw this excess amount at a reduced rate once you reach early retirement age.

If you have opted to grow your funds in the Tuleva Third Pillar Pension Fund, you can conveniently initiate a contribution and set up a standing order through our website by logging into your pension account:


Make a contribution



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