Funded Pensions Act
Passed 12 September 2001
(RT1 I 2001, 79, 480),
entered into force 1 October 2001,
amended by the following Acts:
17.12.2003 entered into force 01.01.2004 - RT I 2003, 88, 591;
10.12.2003 entered into force 01.01.2004 - RT I 2003, 82, 549;
11.12.2002 entered into force 01.01.2003 - RT I 2002, 111, 662;
04.12.2002 entered into force 02.01.2003 - RT I 2002, 105, 612;
20.11.2002 entered into force 26.12.2002 - RT I 2002, 102, 600;
15.05.2002 entered into force 01.07.2002 - RT I 2002, 44, 284;
20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131.
Part 1
General Part
Chapter 1
General Provisions
§ 1. Scope of application of Act
This Act provides the conditions and procedure for the making of contributions to and payments from funded pensions and the bases for the establishment and operation of pension funds.
§ 2. Purpose of Act
The purpose of this Act is to create the opportunity for persons who have made contributions to a funded pension to receive additional income, besides state pension insurance, after reaching retirement age.
§ 3. Funded pension
(1) The following are the types of funded pension:
1) mandatory funded pension;
2) supplementary funded pension.
(2) A mandatory funded pension is a periodic benefit which is guaranteed pursuant to law, for the receipt of which units of a mandatory pension fund are acquired for contributions to a mandatory funded pension, for the amount of the social tax paid for a person and determined by the Social Tax Act and for additional contributions paid on parental benefit, and which is paid from the pension fund or by an insurer.
(10.12.2003 entered into force 01.01.2004 - RT I 2003, 82, 549)
(3) A supplementary funded pension is a benefit for the receipt of which units of a pension fund are acquired or a pension insurance contract is entered into pursuant to the requirements provided for in this Act, and which is subject to tax incentives provided for in the Income Tax Act (RT I 1999, 101, 903; RT I 2001, 11, 49; 16, 69; 50, 283; 59, 359; 79, 480; 91, 544; 2002, 23, 131; 41, 253; 44, 284; 47, 297; 62, 377; 111, 662; 2003, 18, 105; 58, 387; 82, 549; 88, 587; 591).
§ 4. Pension fund
(1) A pension fund is a contractual investment fund within the meaning of the Investment Funds Act (RT I 1997, 34, 535; 1998, 61, 979; 2000, 10, 55; 57, 373; 2001, 48, 268; 79, 480; 89, 532, 93, 565; 2002, 23, 131; 53, 336; 63, 387; 102, 600; 105, 612; 2003, 23, 133; 51, 355; 88, 591), the principal objective of which is to provide unit-holders of the pension fund with a funded pension under the conditions and pursuant to the procedure provided for in this Act.
(2) The following are the types of pension fund:
1) mandatory pension fund;
2) voluntary pension fund.
(3) Contributions to and payments from mandatory pension funds are made in connection with the payment of mandatory funded pensions.
(4) Contributions to and payments from voluntary pension funds are made in connection with the payment of supplementary funded pensions.
§ 5. Specifications for application
The provisions of §§ 6-26, 33, 37-46 and 50-54 of this Act do not apply to the acquisition and redemption of units by pension management companies.
Chapter 2
Mandatory Funded Pension
Division 1
Contributions to Mandatory Funded Pension
§ 6. Obligated person
(1) Contributions to a mandatory funded pension shall be made by a resident natural person (hereinafter obligated person) on the condition that social tax is paid or is to be paid for the person pursuant to the Social Tax Act (RT I 2000, 102, 675; 2001, 50, 285; 59, 359; 79, 480; 91, 544; 95, 587; 2002, 44, 284; 62, 377; 111, 662; 2003, 82, 549; 88, 587; 591).
(2) Contributions to a mandatory funded pension (hereinafter contribution) shall not be made by any person not specified in subsection (1) of this section or by any person for whom social tax is paid only pursuant to the provisions of § 6 of the Social Tax Act.
(11.12.2002 entered into force 01.01.2003 - RT I 2002, 111, 662)
(3) The right and obligation to make contributions arise on 1 January of the year following the year during which the obligated person attains 18 years of age and extinguish on 1 January of the year following the year during which the registrar grants an application specified in § 45 or 51 of this Act which is submitted by the obligated person. The obligated person must notify the withholding agent for the contributions of the grant of the abovementioned application.
(15.05.2002 entered into force 01.07.2002 - RT I 2002, 44, 284)
§ 7. Object of contribution
(1) Contributions shall be made on remuneration specified in clauses 2 (1) 1)-4), 6) and 8) of the Social Tax Act.
(15.05.2002 entered into force 01.07.2002 - RT I 2002, 44, 284)
(2) Contributions shall not be made on amounts specified in clauses 2 (1) 5) and 7) and § 3 of the Social Tax Act. Contributions shall also not be made on unemployment insurance benefits provided for in the Unemployment Insurance Act (RT I 2001, 59, 359; 82, 488; 2002, 44, 284; 57, 357; 61, 375; 89, 511; 111, 663; 2003, 17, 95; 88, 591).
(15.05.2002 entered into force 01.07.2002 - RT I 2002, 44, 284)
§ 8. Rate of contribution
The rate of contribution is 2 per cent of the remuneration specified in subsection 7 (1) of this Act.
§ 81. Additional contributions to mandatory pension fund upon receipt of parental benefit
(1) One per cent of the amount of parental benefit (hereinafter benefit) is additionally allocated from the state budget (hereinafter additional contribution) per each born child for a person who is obligated to make additional contributions to a mandatory pension fund and who receives the benefit pursuant to the Parental Benefit Act.
(2) Additional contributions to a mandatory pension fund shall be made for an obligated person during the period of payment of the benefit as of the grant of the benefit.
(3) An obligated person acquires units of a mandatory pension fund provided for in subsection 16 (2) of this Act for an additional contribution.
(4) The provisions concerning contributions apply to additional contributions.
(10.12.2003 entered into force 01.01.2004 - RT I 2003, 82, 549)
§ 9. Competence of Tax and Customs Board upon administration of contribution
(17.12.2003 entered into force 01.01.2004 - RT I 2003, 88, 591)
(1) The provisions of the Taxation Act (RT I 2002, 26, 150; 57, 358; 63, 387; 99, 581; 110, 660; 111, 662; 2003, 2, 17; 48, 341; 71, 472; 82, 554; 88, 591) concerning taxes apply to contributions. The Tax and Customs Board shall verify that the contributions are made correctly, designate, if necessary, the amounts payable, collect the amounts payable pursuant to the procedure provided for in the Taxation Act, and apply coercive measures permitted by law in order to enforce the performance of obligations.
(15.05.2002 entered into force 01.07.2002 - RT I 2002, 44, 284; 17.12.2003 entered into force 01.01.2004 - RT I 2003, 88, 591)
(2) The provisions of the Taxation Act concerning withholding agents apply to withholding agents for contributions and the provisions of the Taxation Act concerning taxpayers apply to obligated persons. Sanctions prescribed in the Taxation Act and by other penal laws shall be imposed on such persons for any violation of the obligations of taxpayers and withholding agents provided by law.
(15.05.2002 entered into force 01.07.2002 - RT I 2002, 44, 284)
(3) Data on obligated persons, persons making contributions and withholding agents for contributions shall be entered in the register of taxable persons established pursuant to the Taxation Act.
(15.05.2002 entered into force 01.07.2002 - RT I 2002, 44, 284)
§ 10. Procedure for making contributions
(1) A payer of social tax provided for in § 4 of the Social Tax Act shall:
1) check with the Estonian Central Register of Securities whether a recipient of remuneration specified in subsection 7 (1) of this Act is an obligated person and withhold contributions at the rate specified in § 8 of this Act on such remuneration of the obligated person, taking account of the provisions of clause 2) of this subsection;
2) check with the Estonian Central Register of Securities whether a recipient of remuneration specified in clauses 2 (1) 4) and 6) of the Social Tax Act is an obligated person and withhold contributions on such remuneration of the obligated person, unless the recipient of the remuneration is entered in the commercial register or registered with the regional tax centre of the Tax and Customs Board of his or her residence or place of business as a sole proprietor and the remuneration is his or her business income;
(20.11.2002 entered into force 26.12.2002 - RT I 2002, 102, 600; 17.12.2003 entered into force 01.01.2004 - RT I 2003, 88, 591)
21) check with the Estonian Central Register of Securities whether a recipient of the benefit specified in subsection 81 (1) of this Act is an obligated person and calculate the amount of the additional contribution at the rate specified in subsection 81 (1) of this Act on such benefit paid to the obligated person;
(10.12.2003 entered into force 01.01.2004 - RT I 2003, 82, 549)
3) transfer withheld contributions and additional contributions calculated on the basis of clause 21) of this subsection to the bank account of the Tax and Customs Board by the tenth day of the month following the month in which the contributions are made and submit the corresponding declaration established by the Minister of Finance to the regional tax centre of the Tax and Customs Board of the place of residence or seat of the payer of social tax by the same date;
(10.12.2003 entered into force 01.01.2004 - RT I 2003, 82, 549; 17.12.2003 entered into force 01.01.2004 - RT I 2003, 88, 591)
4) issue, at the request of a person to whom amounts provided for in subsection 7 (1) of this Act have been paid or for whom additional contributions provided for in subsection 81 (1) have been made, a certificate to the person concerning the withheld contribution or additional contribution by 1 February of the year following the given calendar year or, if he or she leaves employment, together with the final settlement. The standard format for the certificate shall be established by the Minister of Finance.
(10.12.2003 entered into force 01.01.2004 - RT I 2003, 82, 549)
(2) The contribution calculated for each obligated person shall be rounded to full kroons. Amounts less than 50 cents shall not be taken into account and amounts exceeding 50 cents shall be rounded to the next full kroon.
§ 11. Forwarding of funds and information received to registrar
(1) The Tax and Customs Board shall transfer funds received upon the payment of contributions and additional contributions into the bank account of the registrar of the Estonian Central Register of Securities (hereinafter registrar) held in the Bank of Estonia within fifteen working days.
(10.12.2003 entered into force 01.01.2004 - RT I 2003, 82, 549; 17.12.2003 entered into force 01.01.2004 - RT I 2003, 88, 591)
(2) At the same time as funds are transferred, the Tax and Customs Board shall forward the following information to the registrar concerning persons whose funds were transferred to the registrar:
(17.12.2003 entered into force 01.01.2004 - RT I 2003, 88, 591)
1) the name of the person;
2) his or her personal identification code;
3) the size of the contribution made.
4) the amount of the additional contribution.
(10.12.2003 entered into force 01.01.2004 - RT I 2003, 82, 549)
(3) The procedure for the forwarding of information and transfer of funds to the registrar and for the correction of errors related thereto shall be established by the Minister of Finance.
Division 2
Acquisition of Units of Mandatory Pension Funds
§ 12. Choice of pension fund
(1) In order to acquire units of a mandatory pension fund, an obligated person shall submit a corresponding application (hereinafter choice application).
(2) By submitting a choice application, the person undertakes to make contributions to a mandatory funded pension under the conditions and pursuant to the procedure provided for in this Act.
(3) Upon submission of a choice application, an obligated person shall have equal access to the rules of all registered mandatory pension funds.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
§ 13. Choice application
(1) A choice application shall set out the following:
1) the name of the person;
2) his or her personal identification code;
3) the residential address of the person;
4) the name of the mandatory pension fund chosen by the person;
5) confirmation from the person that he or she agrees to the rules of the pension fund chosen by him or her;
6) the preferences of the person regarding the manner in which notices are to be submitted to him or her and regarding the corresponding authority;
7) the date of submission of the application.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(2) The Minister of Finance shall establish the format of choice applications and the application specified in subsection 17 (1) of this Act, prescribing, if necessary, additional information to be set out in the choice application in addition to that provided for in subsection (1) of this section.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
§ 14. Submission of choice application
(1) A choice application shall be submitted by a person to an account administrator of the Estonian Central Register of Securities (hereinafter account administrator) in writing or in a manner which enables written reproduction and identification of the person. The account administrator shall forward the application to the registrar under the conditions and pursuant to the procedure provided for in the Estonian Central Register of Securities Act (RT I 2000, 57, 373; 2001, 48, 268; 79, 480; 89, 532; 93, 565; 2002, 23, 131; 63, 387; 110, 657; 2003, 51, 355; 88, 591) and in legislation and documents established on the basis thereof.
(2) A choice application may be submitted to the registrar with a digital signature if the person holds a certificate for giving digital signatures issued pursuant to the Digital Signatures Act (RT I 2000, 26, 150; 92, 597; 2001, 56, 338; 2002, 53, 336; 61, 375; 2003, 88, 591; 594).
(3) An obligated person shall notify the withholding agent of the submission of a choice application.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(4) A choice application may be submitted personally or through a guardian or a representative authorised to that effect in writing. The representative shall prove his or her right of representation to the account administrator and annex a copy of the identification document of the principal to the choice application.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(5) A person who has submitted a choice application shall make contributions to the mandatory pension fund chosen by him or her as of 1 January of the year following the year of submission of the choice application, on the condition that the choice application was submitted by 1 November at the latest. A person who has submitted a choice application after 1 November but before 1 January of the following year shall make contributions to the mandatory pension fund specified in the choise application as of 1 January of the second year following the submission of the application. The person may amend his or her application until 1 November. The format of the application for amendment and the information to be set out therein shall be established by the Minister of Finance.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131; 15.05.2002 entered into force 07.06.2002 - RT I 2002, 44, 284)
§ 15. Pension account
(1) On the basis of a choice application, the registrar shall open a pension account for the obligated person for the registration of units of a pension fund belonging to the person.
(2) A pension account shall not be opened if the choice application does not comply with the requirements established by legislation or if the information set out therein is incorrect. If a pension account is not opened, the registrar shall notify the person who submitted the choice application or the account administrator immediately thereof and of the reasons therefor. In order for a pension account to be opened, the person shall submit a new choice application which does comply with the requirements.
(3) Besides obligated persons who submit choice applications, the registrar shall also open pension accounts for other obligated persons. Pension accounts shall be opened on the basis of information received from the Tax and Customs Board pursuant to subsection 11 (2) of this Act.
(17.12.2003 entered into force 01.01.2004 - RT I 2003, 88, 591)
(4) A pension account shall be opened not later than within five working days as of receipt by the registrar of a choice application or information specified in subsection 11 (2) of this Act.
(5) The information to be entered in a pension account shall be specified, entries shall be made in the pension account, persons shall be notified of entries, and fees for services related to the pension account shall be charged under the conditions and pursuant to the procedure provided for in the Estonian Central Register of Securities Act and legislation established on the basis thereof and in the price list of the registrar.
(6) Orders by the owner of a pension account to make entries or perform other acts provided for in this Act shall meet the requirements established by the registrar.
(7) The owner of a pension account is required to notify the account administrator or, in the case specified in subsection 14 (2) of this Act, the registrar immediately of any changes to the information set out in the choice application or the application provided for in subsection 17 (1) of this Act.
(8) The registrar shall forward information specified in clauses 13 (1) 1)-3) of this Act to the Tax and Customs Board concerning owners of pension accounts who have submitted choice applications.
(17.12.2003 entered into force 01.01.2004 - RT I 2003, 88, 591)
§ 16. Conditions for contributions
(1) A person may only make contributions to one mandatory pension fund at a time.
(2) Contributions shall be made to the mandatory pension fund indicated in the choice application or, in the absence of a choice application, to a mandatory pension fund determined by the registrar by the drawing of lots. The registrar shall obtain the prior approval of the Minister of Finance for the procedure for drawing lots.
(3) If contributions to a mandatory pension fund determined by the registrar have begun and the obligated person submits a choice application, the making of contributions to the pension fund specified in the choice application shall commence as of 1 January of the year following the year during which the application is submitted provided that the application is submitted by 1 November at the latest. The making of contributions on the basis of a choice application submitted after 1 November but before 1 January of the following year to the mandatory pension fund specified in the choise application shall commence as of 1 January of the second year following the submission of the application.
(15.05.2002 entered into force 07.06.2002 - RT I 2002, 44, 284)
§ 17. Contributions to new pension fund and change of pension fund
(1) A person may commence making contributions to a new mandatory pension fund once a year. The provisions of § 13, subsections 14 (1), (2), (4) and (5) and § 16 of this Act apply to the corresponding applications submitted by persons and to the acquisition of units on the basis thereof.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(2) The right of a person to acquire units of a new mandatory pension fund arises on 1 January of the year following the year during which the application specified in subsection (1) of this section is submitted if the application is submitted by 1 November at the latest. The right to acquire units of a new mandatory pension fund arises, on the basis of an application submitted after 1 November but before 1 January of the following year, as of 1 January of the second year following the submission of the application. Until 1 November, a person may amend or withdraw his or her application.
(15.05.2002 entered into force 07.06.2002 - RT I 2002, 44, 284)
(3) Units of a mandatory pension fund may be exchanged for units of another mandatory pension fund (hereinafter change of mandatory pension fund) under the conditions and pursuant to the procedure provided for in §§ 37, 38, 40, 41 and 43 of this Act.
Division 3
Mandatory Funded Pension Payments
§ 18. Entitlement to mandatory funded pension payments
(1) Unit-holders who meet all the following requirements are entitled to mandatory funded pension payments:
1) the person has reached the retirement age provided for in the State Pension Insurance Act (RT I 2001, 100, 648; 2002, 53, 336; 338; 61, 375; 2003, 20, 116; 48, 343; 82, 549; 88, 589);
(15.05.2002 entered into force 07.06.2002 - RT I 2002, 44, 284)
2) the person is being paid a state pension on the basis of the State Pension Insurance Act or another Estonian Act;
3) at least five years have passed since 1 January of the year following the year during which the person commenced making contributions.
(2) The requirement provided for in clause (1) 2) of this section does not apply to persons who are not entitled to a pension on the basis of the Acts specified in the said clause.
§ 19. Payments on basis of insurance contracts
(1) In order to receive a mandatory funded pension, a person entitled to such pension shall enter into an insurance contract for a mandatory funded pension (hereinafter in this Chapter contract) with an insurer who is chosen by the person and who meets the requirements provided for in § 148 of this Act. In the cases provided for in § 20 of this Act, a contract shall not be entered into.
(2) Upon entry into a contract, the person shall pay the insurer, as a single premium, the redemption price of all the redeemed units of mandatory pension funds which belonged to the person (hereinafter total amount of units) unless otherwise provided for in § 21 of this Act.
(3) Payments shall be made periodically to the policyholder on the basis of the contract in equal or increasing amounts (hereinafter annuity) at least once every three months until the death of the policyholder.
§ 20. Payments from pension fund
(1) If, upon entry into a contract, the annuity per calendar month calculated on the basis of the total amount of units proves to be less than one quarter of the national pension rate established on the basis of the State Pension Insurance Act (hereinafter national pension rate), the person is entitled to periodic funded pension payments from a mandatory pension fund.
(2) The amount payable per calendar month to a person as periodic payments from all mandatory pension funds shall not exceed one quarter of the national pension rate. A person has the right to request that payments be made at least once every three months.
(3) If the total amount of units is less than twice the national pension rate, the person has the right to request the redemption of all units as a single payment.
§ 21. Additional payments from pension fund
(1) If the annuity per calendar month calculated on the basis of the total amount of units would be greater than three times the national pension rate, the person is entitled to periodic funded pension payments from a mandatory pension fund to the extent of the amount exceeding the said pension rate. Periodic payments shall only be made to persons who have entered into contracts.
(2) The maximum number of units redeemed from a mandatory pension fund by a person as periodic payments per calendar month shall be determined using calculation methods approved by the Financial Supervision Authority (hereinafter Authority).
(3) If the total amount of units remaining after entry into a contract or after making periodic payments is less than twice the national pension rate, the person has the right to request the redemption of all units as a single payment.
§ 22. Payments upon person’s death
(1) If the unit-holder of a mandatory pension fund dies, units of the mandatory pension fund which belonged to him or her are inheritable under the conditions and pursuant to the procedure provided by this Act.
(2) If a policyholder dies, payments made on the basis of the contract shall be terminated. A guaranteed disbursement period may be prescribed in the contract during which the insurer shall make payments to a beneficiary designated by the policyholder in the contract.
Chapter 3
Supplementary Funded Pension
§ 23. Contributions
(1) In order to receive a supplementary funded pension, a person shall acquire units of a voluntary pension fund chosen by the person or enter into an insurance contract for a supplementary funded pension with an insurer who holds a corresponding activity licence and is chosen by the person.
(2) A person may own and acquire units of several different voluntary pension funds and enter into insurance contracts for a supplementary funded pension with one or several insurers at the same time.
§ 24. Change of pension funds
(1) Units of a voluntary pension fund may be exchanged for units of another voluntary pension fund (hereinafter change of voluntary pension fund) under the conditions and pursuant to the procedure provided for in §§ 37, 39, 40, 42 and 43 of this Act.
(2) Under the conditions and pursuant to the procedure provided for in § 46 of this Act, a person may enter into an insurance contract for a supplementary funded pension for the total amount of the redeemed units of a voluntary pension fund.
§ 25. Payments
(1) A supplementary funded pension shall be paid under the conditions and pursuant to the procedure provided for in this Act, in the pension fund rules and in the insurance contract for the supplementary funded pension.
(2) Unless otherwise provided by this Act, persons who are older than 55 years of age or who have a total and permanent incapacity for work are entitled to supplementary funded pension payments.
§ 26. Payments upon person’s death
(1) If the unit-holder of a voluntary pension fund dies, units of the voluntary pension fund which belonged to him or her are inheritable under the conditions and pursuant to the procedure provided by this Act.
(2) If a policyholder dies, payments shall be made to a beneficiary designated by the policyholder pursuant to the conditions determined in the insurance contract for a supplementary funded pension.
Part 2
Pension Fund and Pension Management Company
Chapter 4
Pension Fund
Division 1
General Provisions
§ 27. Application of Investment Funds Act
The provisions of the Investment Funds Act apply to pension funds, management companies managing pension funds (hereinafter pension management companies) and depositaries of pension funds, unless otherwise provided by this Act.
§ 28. Name of pension fund
(1) The word “pensionifond” [pension fund] shall be used in the name of a pension fund.
(2) Other persons, agencies and associations shall not use the word “pensionifond” or words or abbreviations with a misleadingly similar meaning in Estonian or in any other language in their name.
(3) Words which would misleadingly give reason to believe that a pension fund is of a different type than it actually is shall not be used in the name of a mandatory or voluntary pension fund.
§ 29. Unit-holder
(1) Units of pension funds shall only be acquired or owned by natural persons and pension management companies or persons who have operated as a pension management company under the conditions and pursuant to the procedure provided for in §§ 117-128 of this Act.
(2) A unit of a pension fund is indivisible and shall not belong to several persons at the same time.
(3) Units of a pension fund may be the joint property of spouses.
§ 30. Nominal value and net asset value of units
(1) The nominal value of a unit of a pension fund shall be 10 kroons.
(2) The net asset value of a unit of a pension fund shall be established with an accuracy of two decimal places.
§ 31. Transactions involving units of pension funds
(1) Units of a pension fund shall not be transferred or encumbered.
(2) A unit-holder may request, pursuant to the procedure provided for in the Investment Funds Act and this Act, the redemption of units of a pension fund by a pension management company.
(3) In the event of the bankruptcy of a unit-holder or a claim for payment being made on the assets of the unit-holder pursuant to enforcement procedure, the trustee in bankruptcy or the bailiff, as appropriate, has the right to demand the redemption of units from the voluntary pension fund or, in the event of the liquidation of the voluntary pension fund, the making of payments. In other cases it is prohibited to make a claim for payment on units of a pension fund.
Division 2
Contributions to Pension Funds
§ 32. Contribution
(1) Upon the making of a contribution to a pension fund, the person acquires the number of units issued by the pension management company corresponding to the size of the contribution.
(2) Contributions shall be made to a pension fund at the issue price of units specified in § 38 of the Investment Funds Act (hereinafter issue price).
(3) Upon calculation of the issue price of units, the same issue fee rate shall be charged for units issued on one and the same day, unless otherwise provided for in this Act and in the corresponding pension fund rules. The issue fee rate shall not exceed the limit prescribed in the pension fund rules.
§ 33. Limitation of contributions
(1) When units of a voluntary pension fund are issued, it shall not be required that the minimum issue price of units acquired at any one time exceed 500 kroons.
(2) When units of a mandatory pension fund are issued, no limitations on the number of units acquired at any one time or on the amounts payable for the units shall be prescribed in the pension fund rules.
§ 34. Contributions to mandatory pension fund
(1) Contributions to a mandatory pension fund shall be made:
1) upon the receipt of funds specified in § 11 of this Act and in subsection 10 (4) of the Social Tax Act by the registrar;
2) upon a change of mandatory pension fund by a unit-holder;
3) upon the acquisition of units by a pension management company pursuant to the provisions of §§ 117-128 of this Act;
4) upon the acquisition of units if another pension fund is liquidated pursuant to the provisions of § 61 of this Act;
5) upon the acquisition of units for the purposes of compensating for loss pursuant to the procedure provided for in § 127 of this Act and in the Guarantee Fund Act (RT I 2002, 23, 131; 57, 357; 102, 600).
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(2) The provisions of subsection 45 (4) of the Investment Funds Act concerning the issue of units apply to contributions made on the basis of clause (1) 1) of this section only if the Authority makes a corresponding decision.
(3) If a decision is made to suspend the issue of units of a pension fund pursuant to the provisions of subsection (2) of this section, the registrar shall keep the funds received for the acquisition of such units in the bank account specified in subsection 11 (1) of this Act.
§ 35. Procedure for issue of units of mandatory pension fund
(1) The issue of units of a mandatory pension fund shall be organised by the registrar pursuant to legislation, the pension fund rules and a contract entered into by the registrar with the pension management company or the depositary of the pension fund.
(2) The registrar shall perform the following operations at the earliest opportunity but not later than on the working day following the receipt of funds specified in clause 34 (1) 1) of this Act and receipt of the required information:
1) register, in the pension account of each person, the whole number of units of the mandatory pension fund chosen by the person corresponding to the amount received for the person and the issue price of a unit;
2) transfer an amount corresponding to the issue price of units registered in pension accounts pursuant to clause 1) of this subsection to bank accounts indicated by the depositaries of the corresponding pension funds;
3) forward, to the depositary or pension management company of each pension fund, information concerning the number of units of the corresponding pension fund additionally registered in pension accounts and amounts transferred therefor. The said information concerning each unit-holder shall be provided at the request of the pension management company.
(3) The number of units of a pension fund to be registered in a pension account shall be determined based on the issue price of the unit on the date on which the transfer specified in clause (2) 2) of this section is made.
(4) The amount remaining after the number of units of a person which are to be registered in a pension account is determined shall be taken into account when the next units are issued for the person.
(5) If the owner of a pension account enters into a contract for a mandatory funded pension, if payments commence pursuant to §§ 20 or 21 of this Act or if contributions terminate due to the death of the unit-holder, the remaining amount specified in subsection (4) of this section shall be transferred to the pension fund of which units were the last to be transferred to the pension account of the person.
(6) The Minister of Finance shall establish the specific procedure for the issue of units of mandatory pension funds.
§ 36. Bonus issue of units of mandatory pension fund
(1) If the net asset value of a unit of a mandatory pension fund exceeds 20 kroons, all unit-holders shall be issued an additional unit per unit. The net asset value of units shall be adjusted correspondingly upon the issue of the additional units.
(2) No issue fee shall be charged upon the issue of additional units.
(3) The issue of additional units shall be organised by the registrar within three working days after the net asset value of a unit exceeds 20 kroons.
(4) The registrar shall notify the corresponding pension management company of the issue of additional units immediately.
Division 3
Change of Pension Funds
§ 37. Bases for change of pension funds
(1) A unit-holder has the right to exchange the units of a pension fund for units of another pension fund under the conditions and pursuant to the procedure provided for in this Division.
(2) Units of a voluntary pension fund may only be exchanged for units of another voluntary pension fund.
(3) Units of a mandatory pension fund may only be exchanged for units of another mandatory pension fund.
(4) A change of pension funds is not permitted if the redemption or issue of units of either of the pension funds involved in the change is prohibited pursuant to the Investment Funds Act and this Act.
(5) No payments shall be made to unit-holders from pension funds upon a change of pension funds.
§ 38. Terms and conditions for change of mandatory pension funds
(1) In order to exchange the units of a mandatory pension fund, a unit-holder shall own at least 500 units in the pension fund. This restriction does not apply upon exchange of the units of a mandatory pension fund which was designated for the person by drawing lots pursuant to subsection 16 (2) of this Act.
(20.11.2002 entered into force 26.12.2002 - RT I 2002, 102, 600)
(2) All the units of a mandatory pension fund which belong to the unit-holder shall be exchanged at the same time.
(3) Units of mandatory pension funds are exchanged once a year on the working day following 1 January.
§ 39. Terms and conditions for change of voluntary pension funds
(1) In order to exchange the units of a voluntary pension fund, a unit-holder shall own at least 1000 units in the pension fund.
(2) The rules of a voluntary pension fund may prescribe:
1) limitations on the number of units exchanged at any one time;
2) a minimum term commencing as of an exchange of units and after the expiry of which the unit-holder may request another exchange of units.
(3) The number of units specified in clause (2) 1) of this section shall not exceed the number of units provided for in subsection (1) of this section.
(4) The term specified in clause (2) 2) of this section shall not exceed two years.
§ 40. Procedure for change of pension funds
(1) Upon a change of pension funds, the units of one pension fund are redeemed and the units of another pension fund are issued.
(2) Units of the pension funds shall be exchanged pursuant to the procedure prescribed in this Act and in the pension fund rules concerning exchanges.
(3) As a result of an exchange, a person shall acquire, in the amount of the redemption price of the units of a pension fund, a maximum number of units of another pension fund and payment for the units of the other pension fund shall be made at the issue price of the same day.
§ 41. Procedure for change of mandatory pension funds
(1) In order to exchange the units of a mandatory pension fund, a unit-holder shall submit an application to the account administrator or registrar. Applications are subject to the provisions of subsections 14 (1) and (2) of this Act.
(2) The following shall be set out in an application:
1) the name and personal identification code of the unit-holder;
2) the name of the pension fund the units of which the unit-holder wishes to exchange;
3) the name of the pension fund the units of which the unit-holder wishes to acquire for the units belonging to him or her;
4) the date of submission of the application.
(3) If there are deficiencies in an application, the account administrator or registrar, accordingly, has the right to request that additional information or an application which complies with the requirements be submitted.
(4) In order to change mandatory pension funds as at 1 January, an application shall be submitted not later than by 1 November of the year preceding the year of the change. Until 1 November, a person may amend or withdraw his or her application.
(5) Any change of mandatory pension funds shall be organised by the registrar together with the depositary of the pension fund and the provisions of § 53 and subsections 35 (1)-(3) and (6) of this Act apply to the redemption and issue of units accordingly.
(6) The registrar shall refuse to organise a change of pension funds if the information which is submitted to the registrar or forwarded to the registrar via the account administrator is incomplete or ambiguous or does not comply with the requirements established by legislation or in the pension fund rules.
(7) If the redemption of units of a mandatory pension fund the units of which a unit-holder wishes to exchange is prohibited under circumstances provided for in subsection 37 (4) of this Act, the registrar shall organise the exchange at the earliest opportunity after such circumstances cease to exist.
(8) If the issue of units of a mandatory pension fund the units of which a unit-holder wishes to acquire is prohibited under circumstances provided for in subsection 37 (4) of this Act, the registrar shall refuse to exchange the units of the mandatory pension fund and shall notify the applicant thereof immediately.
(9) If the number of units to be issued is determined pursuant to subsection 40 (3) of this Act, the remaining amount specified in subsection 35 (4) of this Act shall be taken into account.
§ 42. Procedure for change of voluntary pension funds
(1) In order to exchange the units of a voluntary pension fund, a unit-holder shall submit a written application to the pension management company.
(2) The following shall be set out in an application:
1) the name of the unit-holder;
2) his or her personal identification code or, in the absence thereof, date of birth;
3) the name of the pension fund the units of which the unit-holder wishes to exchange;
4) the number of units which the unit-holder wishes to redeem;
5) the name of the pension fund the units of which the unit-holder wishes to acquire;
6) the date of submission of the application;
7) other information prescribed in the pension fund rules.
(3) The depositary of a pension fund shall organise the exchange of units of voluntary pension funds during the terms and pursuant to the procedure prescribed in the pension fund rules, but not later than two months after the submission of an application specified in subsection (1) of this section.
§ 43. Fees charged upon change of pension funds
(1) If the units of a pension fund are exchanged, a redemption fee and an issue fee, up to the amount prescribed in the rules of the corresponding pension fund, shall be paid to the pension management company for the units on behalf of the unit-holder.
(2) Unless otherwise provided in this section, the uniform rates provided for in subsections 49 (1) or 32 (3) of this Act (hereinafter in this section uniform rate) apply upon the calculation of the fees specified in subsection (1) of this section.
(3) The rate of the redemption fee and issue fee applied upon an exchange of units of pension funds may be less than the uniform rate if both pension funds involved in the exchange are managed by the same pension management company.
(4) Upon an exchange of units of voluntary pension funds, rates lower than the uniform rate may be applied upon the calculation of the redemption fee depending on the time of acquisition of the units exchanged.
Division 4
Entry into Insurance Contract for Funded Pension
§ 44. Bases for entry into insurance contract
(1) Under the conditions provided for in this Act, a unit-holder may request that the units of a pension fund be redeemed and an insurance contract for a funded pension be entered into for the redemption price of the units.
(2) An insurance contract for a mandatory funded pension shall be entered into in the case provided for in § 19 of this Act.
(3) A unit-holder of a voluntary pension fund has the right to request the redemption of units in order to enter into an insurance contract for a supplementary funded pension if the unit-holder is at least 55 years of age or in the event of the total and permanent incapacity for work of the unit-holder.
(4) Entry into an insurance contract for a funded pension under the conditions provided for in this Division is not permitted if the redemption of units of a pension fund is prohibited pursuant to the Investment Funds Act.
(5) No payments shall be made to unit-holders upon the redemption of units under the conditions provided for in this Division.
§ 45. Procedure for redemption of units upon entry into insurance contract for mandatory funded pension
(1) Upon entry into an insurance contract for a mandatory funded pension (hereinafter in this section contract), a unit-holder of a mandatory pension fund shall, after the contract is entered into, submit an application for the redemption of units to the account administrator or registrar. Applications are subject to the provisions of subsections 14 (1) and (2) of this Act.
(2) A copy of the contract entered into shall be appended to an application. The following shall be set out in an application:
1) the name of the unit-holder;
2) his or her personal identification code;
3) the name of the pension fund of which the redemption of units is applied for by the unit-holder in connection with entry into the contract;
4) the number of units of which redemption is applied for by the unit-holder;
5) the name of the insurer with whom the unit-holder entered into the contract;
6) the size of the single premium payable to the insurer pursuant to the contract;
7) the date of submission of the application;
8) other information prescribed in the pension fund rules.
(3) In co-operation with the depositary of the pension fund and the insurer, the registrar shall organise the redemption of units and the transfer of the insurance premium to the insurer specified in clause (2) 5) of this section within fifteen working days. The provisions of § 53 of this Act apply to the redemption of units.
(4) The registrar shall refuse to grant an application if:
1) the application does not meet the requirements provided for in this section;
2) information set out in the application or contract is inaccurate or contradictory;
3) granting the application would contradict the provisions of §§ 19 or 44 of this Act.
(5) The registrar shall immediately notify the applicant and the corresponding insurer of any refusal to grant an application and of the reasons for refusal.
§ 46. Procedure for redemption of units upon entry into insurance contract for supplementary funded pension
(1) In order to enter into an insurance contract for a supplementary funded pension (hereinafter in this section contract), a unit-holder of a voluntary pension fund shall submit a corresponding application for the redemption of units to the pension management company.
(2) The following shall be set out in an application:
1) the name of the unit-holder;
2) his or her personal identification code or, in the absence thereof, date of birth;
3) the number of units of which redemption is applied for by the unit-holder in order to enter into a contract;
4) the name of the insurer with whom the unit-holder intends to enter into a contract;
5) the size of the single premium payable to the insurer pursuant to the contract;
6) the date of submission of the application;
7) other information prescribed in the pension fund rules.
(3) The redemption of units and transfer of the insurance premium prescribed in the contract to the insurer specified in clause (2) 4) of this section shall be organised by the depositary of the pension fund and approved by the insurer during the terms and pursuant to the procedure prescribed in the pension fund rules, but not later than two months after submission of an application specified in subsection (1) of this section
Division 5
Payments from Pension Fund
§ 47. Bases for payments
(1) Payments shall be made from a pension fund under the following circumstances:
1) payment of a funded pension pursuant to the provisions of §§ 50 and 54 of this Act;
2) succession of units of a pension fund pursuant to the provisions of subsection 57 (1) and § 58 of this Act;
3) liquidation of a voluntary pension fund pursuant to the provisions of §§ 59-61 of this Act;
4) redemption of units pursuant to the provisions of § 120 of this Act.
(2) Pension funds are not subject to the provisions of subsections 47 (1) and (2) of the Investment Funds Act.
§ 48. Conditions for making payments
(1) Payments shall be made from a pension fund by the pension management company at the redemption price specified in § 40 of the Investment Funds Act (hereinafter redemption price) upon the redemption of a person’s units.
(2) No payments shall be made from a pension fund if redemption of the units of the pension fund is prohibited pursuant to the Investment Funds Act.
(3) In order to suspend the redemption of units of a mandatory pension fund on the basis of subsection 45 (1) of the Investment Funds Act, the pension management company shall apply to the Authority for permission (hereinafter in this section permission).
(4) In order to apply for permission, a pension management company shall submit the following to the Authority:
1) an application;
2) information concerning the number of units of the pension fund which have been issued and the number which have been redeemed during the month preceding submission of the application, and information concerning the unit-holders who acquired or transferred the units;
3) information concerning the assets of the pension fund, the net asset value of the units, and changes in the redemption fee and issue fee for units during the month preceding submission of the application;
4) an explanation of the reasons for suspension of the redemption of units;
5) an assessment of the impact of suspension of the redemption of units on the interests of the unit-holders of the pension fund.
(5) The Authority may request that additional or more specific information be submitted by the pension management company in order to review an application.
(6) The Authority shall make a decision to grant permission or to refuse the grant thereof within five working days as of the receipt of the corresponding application by the Authority. The Authority shall refuse to grant permission if:
1) not all the information provided for in subsections (4) and (5) of this section is submitted upon application for permission or if the information is inaccurate or incomplete;
2) it has not been proven that the circumstances specified in the first sentence of subsection 45 (1) of the Investment Funds Act exist;
3) the interests of unit-holders will not be sufficiently protected if the redemption of units is suspended.
(7) If permission is granted or a precept is issued on the basis of subsection 45 (2) of the Investment Funds Act, the Authority may prescribe a term during which the redemption of units may be suspended.
§ 49. Redemption fee
(1) The uniform rate of the redemption fee as prescribed in the pension fund rules shall be applied when the redemption price of units of a pension fund is calculated, unless otherwise provided for in this Act and the pension fund rules.
(2) The rate of the redemption fee for a unit of a pension fund shall not exceed 1 per cent of the net asset value of the unit.
§ 50. Conditions for payments from mandatory pension fund
(1) Funded pension payments from a mandatory pension fund (hereinafter in this section payments) shall be made pursuant to the provisions of §§ 20 and 21 of this Act, subsections (2) and (3) of this section and §§ 51-53 of this Act.
(2) A unit-holder is entitled to periodic payments only, unless otherwise provided by subsection 20 (3) or 21 (3) of this Act.
(3) If a unit-holder does not request, in full or in part, payments to be made to which the unit-holder is entitled, he or she has the right to request the redemption of unredeemed units during subsequent periods.
§ 51. Application for making of payments from mandatory pension fund
(1) In order to receive funded pension payments from a mandatory pension fund, a unit-holder specified in § 18 of this Act shall submit an application to the account administrator or registrar (hereinafter in this and the following section application). Applications are subject to the provisions of subsections 14 (1) and (2) of this Act.
(2) The following shall be set out in an application:
1) the name of the unit-holder;
2) his or her personal identification code;
3) the name of the pension fund from which the unit-holder wishes to receive payments;
4) the number of units of which redemption is applied for by the unit-holder;
5) the date of submission of the application;
6) other information established by the Minister of Finance.
(3) In the case provided for in § 21 of this Act, a copy of the insurance contract for a mandatory funded pension entered into by the person shall be appended to the application.
§ 52. Procedure for making of payments from mandatory pension fund
(1) The making of funded pension payments from a mandatory pension fund (hereinafter in this section payments) shall be organised by the registrar pursuant to the procedure provided for in this Act, in legislation issued on the basis thereof and in the pension fund rules.
(2) In order to make payments or specify conditions therefor, the registrar may request that additional or more specific information be submitted by the unit-holder who submitted the application or by the corresponding insurers.
(3) The registrar may refuse to make payments if the application does not comply with the requirements provided by legislation or if the making of payments on the basis of the application is impossible or is not in compliance with the provisions of §§ 20, 21 or 50 of this Act. The registrar shall immediately notify the applicant of any refusal to make payments and of the reasons for refusal.
(4) The Minister of Finance shall establish the specific conditions and procedure for the making of payments.
§ 53. Procedure for redemption of units of mandatory pension funds
(1) The redemption of units of a mandatory pension fund shall be organised by the registrar within three working days as of the receipt of an application for the redemption of units and pursuant to legislation, the pension fund rules and a contract entered into by the registrar with the pension management company or the depositary of the pension fund.
(2) The term provided for in subsection (1) of this section does not apply upon a change of pension funds or upon entry into an insurance contract for a mandatory funded pension pursuant to the provisions of §§ 38 and 45 of this Act.
(3) The Minister of Finance may establish a specific procedure for the redemption of units of mandatory pension funds.
§ 54. Payments from voluntary pension fund
(1) A unit-holder is entitled to funded pension payments from a voluntary pension fund (hereinafter in this section payments) under the conditions provided for in this section but not before two years have passed since the unit-holder acquired the units which are redeemed in the course of making the payments.
(2) For the purposes of subsection (1) of this section, the acquisition of units into the joint property of spouses is deemed to be the acquisition of units by a unit-holder even if such joint property is later divided.
(3) A unit-holder is entitled to payments if he or she is older than 55 years of age or if he or she has a total and permanent incapacity for work.
(4) Upon the making of payments in cases not specified in subsection (3) of this section, the pension management company shall withhold 2 per cent of the net asset value of the units in addition to the redemption fee. The amount withheld remains in the pension fund.
(5) Upon the making of payments, rates lower than the uniform rate specified in subsection 49 (1) of this Act may be applied upon the calculation of the redemption fee depending on the time of acquisition of the units redeemed.
(6) Upon the making of payments, it is considered that units shall be redeemed in the order in which the units were acquired.
Division 6
Succession of Units of Pension Fund
§ 55. Bases for succession
(1) Units of pension funds are inheritable.
(2) Units of mandatory pension funds can only be bequeathed to natural persons.
(3) If a unit-holder has no successors, any units of a mandatory pension fund which belonged to him or her shall be cancelled. Rights and obligations arising from cancelled units shall be deemed to be terminated.
§ 56. Succession by several persons
(1) Any one unit of a pension fund shall not be inherited by several persons.
(2) Units are deemed to be divided between co-successors in proportion to the share of the co-successors in the estate unless the co-successors agree otherwise within three months after acceptance of a succession. Units remaining after division shall be redeemed and payments in this amount shall be made from the pension fund to the co-successors.
§ 57. Redemption of inherited units
(1) If a successor is a natural person, he or she has the right, within one calendar year after acceptance of the succession, to demand the redemption of all or some of the units. In such case, the provisions of subsection 18 (1) of this Act do not apply.
(2) If a successor has not demanded the redemption of units during the term specified in subsection (1) of this section, it is deemed that he or she has acquired the units bequeathed to him or her from the date of acceptance of the succession, and that he or she has the right to demand the redemption of the units pursuant to the general conditions and has other rights arising from the units.
§ 58. Succession by legal persons
(1) If units of a voluntary pension fund are bequeathed to a legal person, such units are deemed to be redeemed from the date of acceptance of the succession.
(2) A successor who is a legal person has the right to demand monetary payment for each unit inherited by the successor in the amount of the redemption price on the date the demand is submitted.
(3) A successor who is a legal person loses the right specified in subsection (2) of this section if the successor does not demand payment within three months after accepting the succession. Money which is not demanded remains in the pension fund and the corresponding unit is deleted.
Division 7
Liquidation of Pension Fund
§ 59. Bases for liquidation of pension fund
(1) A pension fund is liquidated pursuant to the procedure provided for in the Investment Funds Act, this Act and the pension fund rules.
(2) The liquidation of a pension fund is only permitted with the permission of the Authority.
(3) Upon the liquidation of a pension fund, the making of payments is not subject to the provisions of §§ 48-54 of this Act.
§ 60. Permission for liquidation of pension fund
(1) In order to obtain permission for the liquidation of a pension fund (hereinafter in this section permission), the depositary of the pension fund shall file an application.
(2) The list of information to be submitted upon application for permission shall be established by the Minister of Finance. The Authority may request that additional or more specific information be submitted by the depositary of the pension fund, the registrar and the pension management company in order to review an application.
(3) The Authority shall make a decision to grant permission or to refuse the grant thereof within ten working days after the submission of all the information specified in subsection (2) of this section but not later than within one month after the submission of an application which complies with the requirements.
(4) The Authority shall, by its reasoned decision, refuse to grant permission if not all the opportunities to transfer the management of the pension fund have been exhausted.
(5) The Authority may prescribe mandatory conditions for liquidation in the permission for the liquidation of a mandatory pension fund. The conditions for liquidation prescribed in the permission may be amended at the request of the depositary of the pension fund or the liquidators specified in subsection 51 (4) of the Investment Funds Act.
§ 61. Specifications for liquidation of mandatory pension fund
(1) In the case of a mandatory pension fund, the deadline for the transfer of management provided for in subsection 50 (3) of the Investment Funds Act may be extended with the permission of the Authority to up to eighteen months.
(2) Upon the liquidation of a mandatory pension fund, the issue of units based on contributions specified in clauses 34 (1) 1) and 3) of this Act shall not be suspended unless the Authority prescribes otherwise in the permission for the liquidation of the pension fund. If the issue of units is suspended, contributions specified in clause 34 (1) 1) of this Act shall continue into the pension fund specified in subsection (3) of this section.
(3) If a mandatory pension fund is liquidated, every unit-holder shall, corresponding to the amount of money to be distributed, acquire a number of units of another mandatory pension fund chosen by him or her or, if the unit-holder fails to make a choice, determined by the Authority. The acquisition of units is subject to the provisions of §§ 32, 33 and 35 of this Act.
(4) The Minister of Finance shall, by a regulation, establish the specific procedure for the liquidation of mandatory pension funds and for application for and the grant of permission for the liquidation of mandatory pension funds.
Chapter 5
Activity Licences for Management of Pension Funds
§ 62. Activity licence
(1) A pension fund may only be managed by a public limited company which holds a corresponding activity licence or, in the case provided for in § 50 of the Investment Funds Act, by the depositary of the pension fund.
(2) Activity licences are issued for an unspecified term.
(3) An activity licence is not transferable, and its acquisition or use by other persons is prohibited.
§ 63. Classes and scope of activity licences
(1) The following are the classes of activity licence for the management of pension funds:
1) activity licence for the management of a voluntary pension fund;
2) activity licence for the management of a mandatory pension fund.
(2) An activity licence for the management of a voluntary pension fund grants the right to manage voluntary pension funds, to manage other investment funds and to provide investment services provided for in subsection 3 (4) of the Investment Funds Act.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(3) An activity licence for the management of a mandatory pension fund grants the right to manage pension funds of any type, to manage other investment funds and to provide investment services provided for in subsection 3 (4) of the Investment Funds Act.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
§ 64. Decision
(1) Activity licences for the management of a pension fund (hereinafter activity licences) are issued and revoked by a decision of the Authority.
(2) At least the following shall be set out in a decision concerning an activity licence:
1) the name and registry code of the applicant for or holder of the activity licence;
2) the class of the activity licence;
3) the number of the activity licence;
4) the date on which the decision is made and enters into force.
(3) Upon refusal to issue or revocation of an activity licence, the corresponding justification shall be indicated in the decision.
§ 65. Notification regarding decisions
(1) The Authority shall forward a decision concerning an activity licence to the person regarding whose activity licence the decision is made immediately after making the decision.
(2) The Authority shall also immediately notify the registrar of a decision concerning an activity licence for the management of a mandatory pension fund.
(3) If an activity licence is revoked, the Authority shall notify the depositaries of investment funds managed by the pension management company thereof immediately.
(4) A notice concerning the revocation of an activity licence shall be published by the Authority in at least one daily national newspaper not later than on the fifth calendar day as of the corresponding decision being made.
§ 66. Application for activity licence
(1) In order to apply for an activity licence, an application shall be submitted to the Authority.
(2) An application consists of a written application and the annexes specified in § 67 of this Act. The Minister of Finance may establish the format of the application.
(3) Confirmation signed by all members of the management board of the applicant regarding the correctness of the information and documents submitted shall be appended to an application and to information which is submitted later in connection with the application. The correctness of information and documents submitted concerning natural persons specified in clauses 67 4)–6) of this Act shall be confirmed by the signature of the persons specified.
§ 67. Information to be submitted upon application for activity licence
Upon application for an activity licence, the following documents and information shall be submitted to the Authority:
1) the memorandum of association and articles of association of a company being founded, the resolution of the general meeting of an operating company on amendment of the articles of association of the applicant, and the amended text of the articles of association;
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
2) a transcript of the registry card from part B of the card register of the commercial register;
3) information on the shareholders of the applicant which includes the name, registry code or personal identification code, or date of birth in the absence of a personal identification code, and the number of shares and votes of each shareholder;
4) information specified in § 70 of this Act on persons who own qualifying holdings in the applicant;
5) information on the members of the management board and supervisory board of the applicant which includes each member’s given name and surname, personal identification code or date of birth in the absence of a personal identification code, residence, educational background, a complete list of places of employment and positions held during the last five years and, in the case of members of the management board, a description of their duties;
6) the information specified in clause 5) of this section on other members of the management of the applicant (managing director, chief accountant, etc.), fund managers employed by the applicant and persons who conduct internal audits;
7) information on the procurator and auditor of the applicant which includes the given name and surname, residence, and personal identification code or date of birth in the absence of a personal identification code, of each;
8) information on companies in which the applicant, a member of its management board or supervisory board, or a person specified in clause 6) of this section has a qualifying holding; this information shall include the amount of stock capital or share capital, a list of areas of activity and the size of the holding of the above-mentioned persons;
9) the last approved annual report of the applicant;
10) the balance sheet and income statement of the applicant as at the end of the month prior to submission of the application;
11) in the case of an applicant operating as a management company, an activity report which complies with the requirements provided for in § 71 of this Act and which contains all the material information on and an analysis of the activities and development of the applicant as at the end of the month prior to submission of the application;
12) in the case of an applicant operating as a management company, the last approved annual or half-yearly reports of the investment funds managed by the applicant, and a statement of investments which is compiled as at the end of the month prior to submission of the application;
13) a business plan which complies with the requirements provided for in § 72 of this Act;
14) the internal rules provided for in § 109 of this Act;
15) statements, which upon submission of the application shall not be more than ten days old, from the regional tax centre of the Tax and Customs Board certifying the absence of tax arrears of the applicant and the legal persons specified in clause 4) of this section;
(17.12.2003 entered into force 01.01.2004 - RT I 2003, 88, 591)
16) proof of payment of the state fee.
§ 68. Qualifying holding
For the purposes of this Act, a qualifying holding is a direct or indirect holding held by a person or persons belonging to the same group in a company which constitutes 10 per cent or more of the share capital or the number of votes of the company or which, on the basis of a contract or in another manner, renders the holder of the holding capable of significantly influencing the management or activities of the company.
§ 69. Procedure for calculation of holding
(1) For the purposes of calculating voting rights in order to determine the size of a qualifying holding or another holding in a company, a person is deemed in this Act to hold the following votes:
1) votes determined by shares held by the person;
2) votes determined by shares held by a company controlled by the person;
3) votes determined by shares held by a third party with whom the person has entered into an agreement which obliges the parties to use concerted voting to adopt a common policy towards the management of the company;
4) votes determined by shares held by a third party but which, pursuant to an agreement entered into by the person or a company controlled by him or her and the third party, have been temporarily transferred to the person or if the person votes on behalf of the holder of such shares.
(2) For the purposes of this Act, a controlled company is a company in which a person:
1) holds at least one-half of the votes determined by shares;
2) while being a shareholder, has the right to appoint or remove a majority of the members of the supervisory or management board of the company, or
3) while being a shareholder, controls a majority of the votes determined by shares pursuant to an agreement entered into with other shareholders.
§ 70. Information to be submitted on persons who have qualifying holdings
(1) Upon application, the following information and documents on legal persons who own qualifying holdings in an applicant shall be submitted:
1) the name and registry code;
2) the annual reports for the two preceding years;
3) the given name and surname, personal identification code, or date of birth in the absence of a personal identification code, and educational background of and a list of places of employment and positions held during the last three years by each member of the management board or the body substituting for the management board, and of the supervisory board upon the existence of such body;
4) if the person with a qualifying holding belongs to a group, a description of the structure of the group and the last annual report of the parent company and the group, if there is a group;
5) if a qualifying holding is owned by a foreign management company, investment firm, credit institution or insurer, a certificate issued by the appropriate supervisory authority which proves that the said foreign company holds a valid activity licence and complies with the standards in force.
(2) Upon application, information specified in clause 67 5) of this Act shall be submitted on natural persons who own qualifying holdings in the applicant.
§ 71. Activity report
The report specified in clause 67 11) of this Act shall, among other matters, set out the following information, and a description and analysis thereof:
1) the size of the share capital and shareholders' equity of the applicant;
2) changes in the investment policy of the investment funds managed;
3) the market value, net asset value and rate of return of the assets and the structure of investments of the investment funds managed, and changes thereto;
4) the number of units which have been issued and the number of units which have been redeemed;
5) the number of unit-holders who are natural persons and their proportion in the investment funds managed by the applicant;
6) the size of the management fees, depositary’s charges and other expenses incurred on behalf of the investment funds;
7) the management structure of the management company, the organisational and technical administration of its activities, and the rights, obligations and liability of persons involved in the management of investment funds.
§ 72. Business plan
(1) The business plan specified in clause 67 13) of this Act shall set out a forecast and analysis of all the important economic indicators of the pension management company and the investment funds managed by the pension management company, a description of the rights, obligations and liability of persons involved in the management structure of the management company and in the management of the pension fund, and a description, forecast and analysis of the following factors:
1) the net turnover and expenditure of the applicant by business activity;
2) the size of the assets, share capital and shareholders' equity of the applicant;
3) the development of the organisational structure and technical administration of the pension management company, and the organisation of the issue of units;
4) the types and number of investment funds managed;
5) the market value, net asset value and rate of return of the assets of the pension funds;
6) the investment policy and structure of investments of the pension funds (division by security and asset class, foreign issuer, sector of the economy, etc., and risks and the rate of return by type of investment);
7) the size and structure of the management expenses of the pension funds;
8) the rates for and size of proceeds from management fees, depositary’s charges, and the issue and redemption fees of units.
(2) Upon application for an activity licence for the management of a voluntary pension fund, a business plan shall be submitted for at least three years, and upon application for an activity licence for the management of a mandatory pension fund, a business plan shall be submitted for at least five years.
§ 73. Review of applications
(1) If, upon application for an activity licence, an applicant fails to submit all the information and documents specified in §§ 66-72 of this Act or if the said information and documents are incomplete or are not prepared according to the requirements, the Authority shall request that the applicant eliminate the deficiencies.
(2) If it is not possible, on the basis of the information and documents specified in §§ 66 and 67 of this Act, to verify whether the applicant for an activity licence has adequate facilities to manage pension funds or whether the applicant meets the requirements established for pension management companies by law or on the basis thereof, the Authority may request that additional information and documents be submitted.
(3) In order to verify the information submitted by an applicant, the Authority may request that more specific information and documents be submitted and may perform on-site inspections pursuant to the procedure provided for in § 136 of the Investment Funds Act.
(4) The information specified in subsections (1)-(3) of this section shall be submitted within the term set by the Authority.
§ 74. Decision on issue of activity licence
(1) The decision to issue an activity licence for the management of a voluntary pension fund or to refuse the issue thereof shall be made by the Authority within three months after the receipt of a corresponding application by the Authority but not later than within one month after the receipt of all the necessary documents and information.
(2) The decision to issue an activity licence for the management of a mandatory pension fund or to refuse the issue thereof shall be made by the Authority within six months after the receipt of a corresponding application by the Authority but not later than within two months after the receipt of all the necessary documents and information.
§ 75. Refusal to issue activity licence
(1) The issue of an activity licence shall be refused if:
1) upon application for the activity licence, not all the information and documents specified in §§ 66-73 of this Act are submitted, if the information or documents submitted do not meet the requirements provided for in this Act or in legislation established on the basis thereof, or if the information or documents are incorrect, misleading, incomplete or incorrectly prepared;
2) the applicant fails to submit on time or refuses to submit to the Authority information or documents which are subject to submission to the Authority or requested by the Authority;
3) the applicant does not meet the requirements established by legislation for pension management companies of the corresponding type;
4) the applicant has violated provisions of legislation, the rules or articles of association of the investment fund, or the management contract specified in § 72 of the Investment Funds Act, or has provided misleading information to the public or violated good business practices in some other way;
5) the applicant does not have the necessary funds or experience to operate as a pension management company of the corresponding type with success and continuity;
6) the persons specified in clauses 67 4)-6) of this Act do not meet the requirements provided by legislation;
7) the knowledge, skills, experience and other capabilities and characteristics of the persons specified in clause 6) of this subsection are not adequate to ensure sufficient protection of the interests of the unit-holders of the pension fund;
8) the business plan specified in § 72 of this Act is incomplete or contains contradictory and inadequate information or assessments;
9) the investment policy proposed in the business plan specified in § 72 of this Act does not ensure that risk will be adequately spread or that there will be the necessary reliability and sustainable growth of the assets of the pension fund or that the interests of the unit-holders of the pension fund would be sufficiently protected for another reason upon implementation of the business plan;
10) the applicant, persons belonging to the same group as the applicant or persons specified in clause 6) of this subsection are neither sufficiently reliable nor capable to the necessary extent of ensuring that the interests of the unit-holders of the pension fund are promoted.
(2) Among other matters, the following shall be considered upon assessment of the provisions of clauses (1) 5) and 10) of this section:
1) the level of the organisational and technical administration of the activities of the applicant;
2) the professional qualifications and experience of persons engaged in the management of investment funds, and the transparency of their rights, obligations and liability;
3) the value, rate of return and sustainability of growth of the assets of investment funds managed by the applicant;
4) the number of unit-holders who are natural persons and their proportion in investment funds managed by the applicant;
5) the level of risk-spreading, and experience in making different types of investments (shares, debt instruments, immovables, derivative instruments, issuers from different states, sectors of the economy, etc.);
6) the activities, financial situation, reputation and experience of the applicant, its parent company and persons belonging to the same group as the applicant.
§ 76. Expiry of activity licences
An activity licence expires:
1) upon the adoption of a resolution to dissolve the pension management company;
2) upon the revocation of the activity licence;
3) upon a merger of pension management companies – the activity licence of the pension management company being acquired expires;
4) upon the declaration of the pension management company as bankrupt.
§ 77. Revocation of activity licences
(1) The revocation of an activity licence is the total or partial deprivation of the right acquired by a decision to issue an activity licence.
(2) An activity licence shall be revoked if:
1) the pension management company has not commenced the activities permitted by the activity licence within twelve months as of the issue of the activity licence or the pension management company has not managed any investment funds within a period of twelve consecutive months;
2) a pension management company which holds an activity licence for the management of mandatory pension funds has not, within a period of six months, managed any mandatory pension funds meeting the requirements provided for in subsection 129 (4) of this Act;
(20.11.2002 entered into force 26.12.2002 - RT I 2002, 102, 600)
3) it becomes evident that misleading or inaccurate information or falsified documents were submitted upon application for the activity licence or that the pension management company has subsequently submitted such information or documents, and if there has been repeated failure to submit information or documents of material importance on time;
4) the pension management company or persons specified in clauses 67 4)-7) of this Act do not, in the opinion of the Authority, meet the requirements established by legislation or if circumstances provided for in clauses 75 (1) 4), 5), 7) or 9) of this Act exist;
5) the share capital, net assets or shareholders’ equity of the pension management company or the holding of the pension management company in the pension fund does not meet the requirements provided for in this Act;
6) the pension management company has, in the course of its activities, materially violated provisions of legislation or the pension fund rules or if the interests of the unit-holders of the pension fund have been harmed by a violation;
7) the pension management company provides materially incorrect or misleading information or advertising concerning its activities, members of its directing bodies, or its shareholders to the public;
8) the pension management company fails to implement a precept of the Authority within the specified term or to the extent prescribed;
9) the pension management company has repeatedly failed to pay contributions to the Pension Protection Sectoral Fund provided for in the Guarantee Fund Act on time or to the full extent.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(3) Prior to deciding on the revocation of an activity licence, the Authority may issue a precept to the pension management company and set a term for the elimination of deficiencies which are the basis for the revocation.
(4) An activity licence shall be revoked at the request of the pension management company if the company no longer manages any investment funds and if the interests of the unit-holders and shareholders of the investment funds previously managed by the company are sufficiently protected.
(5) A request specified in subsection (4) of this section shall be reviewed by the Authority and a decision to revoke or to refuse to revoke the activity licence shall be made within two months as of the receipt of the request.
Chapter 6
Pension Fund Rules and Registration Thereof
Division 1
Pension Fund Rules
§ 78. Specifications of pension fund rules
In addition to the provisions of subsection 34 (1) of the Investment Funds Act, the following shall be set out in pension fund rules:
1) the conditions and procedure for the acquisition of units of the pension fund by the pension management company and for the redemption thereof;
2) the conditions and procedure for the exchange of units of the pension fund;
3) specifications to the procedure for the redemption of units of the pension fund upon entry into an insurance contract for a funded pension;
4) the procedure for making payments upon the succession of units;
5) other conditions provided for in this Act.
§ 79. Specifications of rules of mandatory pension fund
In addition to the provisions of § 78 of this Act, the following shall be set out in the rules of mandatory pension funds:
1) (Repealed - 20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
2) the conditions and procedure for the cancellation of units of the pension fund which belong to the pension management company or person who has operated as a pension management company;
3) the procedure for the cancellation of units of the pension fund in the case provided for in subsection 55 (3) of this Act if there are no successors;
4) (Repealed - 20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
5) the conditions and procedure for the making of periodic payments from the pension fund.
Division 2
Registration of Pension Fund Rules
§ 80. Application for registration
(1) In order to register pension fund rules, a pension management company shall submit an application to the Authority.
(2) An application consists of a written application and the annexes specified in § 81 of this Act. The Minister of Finance may establish a standard format for applications.
(3) Confirmation signed by all members of the management board of the applicant regarding the correctness of the information and documents submitted upon application shall be appended to an application and to information and documents which are submitted later in connection with the application. The fund manager of the pension fund shall confirm the correctness of the information and documents specified in clause 81 (1) 6) of this Act by his or her signature.
§ 81. Information to be submitted upon application
(1) In order to register the pension fund rules, a pension management company shall submit the following documents and information to the Authority:
1) the resolution to establish the pension fund;
2) the pension fund rules;
3) the pension fund prospectus;
4) a depositary contract entered into with the depositary of the pension fund;
5) an overview of the activities of the depositary to date as a depositary for investment funds;
6) the information specified in subsection (3) of this section concerning the fund manager of the pension fund;
7) proof of payment of the state fee.
(2) In order to register a mandatory pension fund, the following shall be submitted in addition to that set out in subsection (1) of this section:
1) the registrar’s opinion on the pension fund rules;
2) the contracts specified in subsections 35 (1) and 53 (1) of this Act;
3) (Repealed - 20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(3) The following shall be submitted on the fund manager of a pension fund:
1) the decision on appointment of the fund manager of the pension fund;
2) information specified in clauses 67 5) and 8) of this Act;
3) a detailed overview of the investment funds managed by the fund manager during the last ten years (number and types of investment funds, structure of investments, value of assets, rate of return, etc.);
4) an overview of the activities of the fund manager regarding provision of the services provided for in clause 43 5) of the Securities Market Act (hereinafter securities portfolio management);
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
5) information on all precepts issued to the fund manager and in connection with the investment funds managed by the fund manager and on compliance with such precepts, and information on cases specified in §§ 45 and 49 of the Investment Funds Act;
6) confirmation from the fund manager that no circumstances exist which according to the Investment Funds Act or this Act would preclude his or her right to be the fund manager of the pension fund.
§ 82. Review of applications
(1) If, upon registration of the pension fund rules, the pension management company fails to submit all the information and documents specified in § 81 of this Act or if the said information and documents are incomplete or are not prepared according to the requirements, the Authority shall request that the pension management company eliminate the deficiencies.
(2) In order to verify the information submitted by a pension management company, the Authority may request that the pension management company, registrar or the depositary of the pension fund submit more specific information and documents and may perform on-site inspections pursuant to the procedure provided for in § 136 of the Investment Funds Act.
§ 83. Decision on registration
(1) The decision to register the rules of a voluntary pension fund or to refuse the registration thereof shall be made by the Authority within forty-five calendar days after the receipt of a corresponding application by the Authority but not later than within fifteen calendar days after the receipt of all the necessary documents and information.
(2) The decision to register the rules of a mandatory pension fund or to refuse the registration thereof shall be made by the Authority within sixty calendar days after the receipt of a corresponding application by the Authority but not later than within twenty calendar days after the receipt of all the necessary documents and information.
(3) At least the following shall be set out in a decision concerning the registration of pension fund rules:
1) the name and registry code of the pension management company;
2) the name and registry code of the depositary of the pension fund;
3) the name of the pension fund;
4) the type of the pension fund;
5) the registration number of the pension fund rules;
6) the name and personal identification code of the fund manager of the pension fund;
7) the date on which the decision is made and enters into force.
(4) If the registration of pension fund rules is refused, the corresponding justification and the information specified in clauses (3) 1), 3), 4) and 7) of this section shall be indicated in the decision.
§ 84. Refusal to register
The registration of pension fund rules shall be refused if:
1) upon application for the registration, not all the information and documents specified in §§ 81-82 of this Act are submitted, if the information or documents submitted do not meet the requirements provided by legislation, or if the information or documents are contradictory, incorrect, misleading, incomplete or incorrectly prepared;
2) the pension fund rules do not reflect all the essential rules for the operation of a pension fund in full and in a clear and unambiguous manner, or if the pension fund rules contain provisions which are misleading or contradictory or do not ensure promotion of the best interests of the unit-holders of the pension fund for other reasons;
3) the investment policy proposed in the pension fund rules does not ensure that risk will be adequately spread or that there will be the necessary reliability and sustainable growth of the assets of the pension fund;
4) the mandatory pension fund and the management thereof do not meet the requirements provided for in § 129 of this Act;
5) the fund manager of the pension fund does not meet the requirements provided by legislation or if his or her knowledge, skills, experience and other abilities and characteristics are not adequate to ensure sufficient protection of the interests of unit-holders of a pension fund of the corresponding type;
6) the proposed depositary of the pension fund does not meet the requirements for depositaries of pension funds provided by legislation or is not able for any other reason to ensure that the interests of unit-holders of a pension fund of the corresponding type are promoted to the necessary extent;
7) the depositary contract contains provisions which are contradictory or ambiguous, which prevent the depositary or pension management company from performing their duties in full, or which for some other reason do not enable the best interests of the unit-holders of the pension fund to be promoted;
8) the contract specified in subsections 35 (1) and 53 (1) of this Act contains provisions which contradict each other or legislation or which fail to designate, unambiguously and with sufficient accuracy, the rights and obligations of the registrar, the depositary of the pension fund and the pension management company upon organisation of the issue and redemption of units of the mandatory pension fund;
9) any of the circumstances provided for in subsection 77 (2) of this Act arises.
§ 85. Notification regarding decisions
(1) The Authority shall forward a decision concerning the registration of or refusal to register pension fund rules to the pension management company and the depositary of the pension fund which submitted the application immediately after making the decision.
(2) The Authority shall also immediately notify the registrar of a decision concerning registration of or refusal to register the rules of a mandatory pension fund.
Division 3
Amendment of Pension Fund Rules
§ 86. Application for amendment
(1) In order to amend the pension fund rules, the pension management company shall apply to the Authority for corresponding permission (hereinafter in this Division permission).
(2) An application for permission consists of a written application and the annexes specified in § 87 of this Act.
(3) Confirmation signed by all members of the management board of the pension management company regarding the correctness of the information and documents submitted upon application shall be appended to an application and to information and documents which are submitted later in connection with the application.
§ 87. Information to be submitted upon application
(1) In order to amend the pension fund rules, the pension management company shall submit the following documents and information to the Authority:
1) the resolution to amend the pension fund rules;
2) amendments to the pension fund rules;
3) the amended text of the pension fund rules;
4) a justification of the amendments and an analysis of the effects of the amendments on the further development of the pension fund and on the interests of the unit-holders of the pension fund;
5) the opinion of the depositary of the pension fund on the amendments to the pension fund rules;
6) amendments to the pension fund prospectus and the amended text thereof if amendment of the pension fund rules results in amendments to the prospectus;
7) amendments to the depositary contract and the amended text thereof if amendment of the pension fund rules results in amendments to the depositary contract;
8) proof of payment of the state fee.
(2) Upon amendment of the rules of a mandatory pension fund, the following shall be submitted to the Authority in addition to that set out in subsection (1) of this section:
1) the registrar’s opinion on the amendments to the pension fund rules;
2) amendments to the contracts specified in subsections 35 (1) and 53 (1) of this Act and the amended text thereof if amendment of the pension fund rules results in amendments to the contracts.
§ 88. Review of applications for permission, and making of decision
(1) The review of applications for permission and the giving of notification regarding decisions are subject to the provisions of §§ 82 and 85 of this Act.
(2) The decision to grant or to refuse to grant permission for amendment of the rules of a voluntary pension fund shall be made by the Authority within thirty calendar days after the receipt of a corresponding application by the Authority but not later than within fifteen calendar days after the receipt of all the necessary documents and information.
(3) The decision to grant or to refuse to grant permission for amendment of the rules of a mandatory pension fund shall be made by the Authority within forty-five calendar days after the receipt of a corresponding application by the Authority but not later than within twenty calendar days after the receipt of all the necessary documents and information.
(4) In the event of refusal to grant permission, corresponding justification shall be indicated in the decision.
§ 89. Refusal to grant permission
The grant of permission shall be refused if:
1) upon application for permission, not all the information and documents specified in § 87 of this Act or not all the additionally requested information and documents are submitted, if the information or documents submitted do not meet the requirements provided by legislation, or if the information or documents are incorrect, misleading, incomplete or incorrectly prepared;
2) upon amendment of the pension fund rules, circumstances specified in clauses 84 2), 3), 4), 6), 7), 8) or 9) of this Act would arise;
3) amendment of the pension fund rules would not be in the best interests of the unit-holders of the pension fund for any other reason.
§ 90. Publication and entry into force of amendments
(1) After the grant of permission, the pension management company shall, pursuant to the procedure provided for in the pension fund rules, publish a notice (hereinafter in this section notice) concerning amendments to the pension fund rules.
(2) A notice shall be published in at least one daily national newspaper.
(3) A notice shall set out at least the following:
1) all amendments to the pension fund rules together with explanations of the effects thereof;
2) information concerning approval of the amendments by the Authority;
3) information concerning availability of the amended text of the pension fund rules.
(4) Amendments to the rules of voluntary pension funds enter into force pursuant to the procedure provided for in subsection 36 (6) of the Investment Funds Act.
(5) Amendments to the rules of mandatory pension funds enter into force as of 1 January but not earlier than one hundred calendar days after the publication of a corresponding notice.
Chapter 7
Pension Management Companies
Division 1
Requirements for Capital of Pension Management Companies
§ 91. Share capital
(1) The share capital of a pension management company shall be at least:
1) 12 million kroons, if the pension management company manages a voluntary pension fund;
2) 45 million kroons, if the pension management company manages a mandatory pension fund.
(2) The provisions of § 30 and subsections 31 (1) and (2) of the Insurance Activities Act (RT I 2000, 53, 343; 2001, 43, 238; 48, 268; 59, 359; 87, 529; 93, 565; 2002, 35, 215; 63, 387; 102, 600; 105, 612; 2003, 17, 95) concerning the share capital of insurers apply to the increase or reduction of share capital of pension management companies holding activity licences for the management of a mandatory pension fund.
§ 92. Net assets
(1) The net assets of a pension management company shall not be less than the minimum share capital provided for in § 91 of this Act.
(2) In the event of a violation of the requirement provided for in subsection (1) of this section, the provisions of § 301 of the Commercial Code (RT I 1995, 26–28, 355; RT I 1998, 91–93, 1500; 1999, 10, 155; 23, 355; 24, 360; 57, 596; 102, 907; 2000, 29, 172; 49, 303; 55, 365; 57, 373; 2001, 34, 185; 56, 332 and 336; 89, 532; 93, 565; 2002, 3, 6; 35, 214; 53, 336; 61, 375; 63, 387; 388; 96, 564; 102, 600; 110, 657; 2003, 4, 19; 13, 64; 18, 100; 78, 523; 88, 591) apply.
§ 93. Shareholders' equity
(1) The shareholders’ equity of a pension management company shall be at least 2 per cent of the net asset value of the pension funds managed by the pension management company, unless otherwise provided in subsection (2) of this section.
(2) The share holders’ equity of a pension management company which manages pension funds with a net asset value greater than 2 billion kroons shall be at least 40 million kroons plus 1 per cent of that part of the net asset value of the pension funds managed by the pension management company which exceeds 2 billion kroons.
(3) Upon assumption of the management of a pension fund, the requirement provided for in subsection (1) or (2) of this section shall be complied with within six months after the transfer of management authority unless the Authority determines otherwise upon approval of the transfer of management of the pension fund.
Division 2
Articles of Association of Pension Management Companies and Amendment Thereof
§ 94. Specifications of articles of association
The articles of association of a pension management company shall, in addition to the provisions of the Commercial Code concerning public limited companies, set out the competence of the management board and supervisory board and the procedure for resolution of the following matters:
1) establishment of pension funds and other investment funds;
2) approval and amendment of pension fund rules;
3) entry into and amendment of depositary contracts;
4) entry into and amendment of contracts specified in subsections 35 (1) and 53 (1) of this Act;
5) appointment of fund managers of investment funds;
6) transfer of the management of investment funds;
7) suspension of the redemption of units.
§ 95. Application for amendment of articles of association
(1) Amendments to the articles of association of pension management companies holding activity licences for the management of a mandatory pension fund shall be approved by the Authority prior to the entry of the amendments in the commercial register.
(2) In order to obtain approval for amendments to its articles of association, a pension management company shall submit the following information and documents to the Authority:
1) an application with an explanation of the reasons for the amendments to the articles of association;
2) the resolution of the general meeting on amendment of the articles of association with an extract from the minutes concerning the voting results;
3) the amended text of the articles of association.
(3) In order to verify the information submitted by a pension management company and decide on the approval, the Authority may request that more specific information and documents be submitted by the pension management company and may perform on-site inspections pursuant to the procedure provided for in § 136 of the Investment Funds Act.
§ 96. Approval of amendments to articles of association
(1) The Authority shall make a decision to approve or to refuse to approve amendments to articles of association within ten calendar days after the receipt of the corresponding application by the Authority. In the event of refusal to approve, the corresponding justification shall be indicated in the decision.
(2) Approval shall be refused if:
1) upon application for approval, not all the information and documents specified in subsection 95 (2) of this Act or not all the additionally requested information and documents are submitted;
2) the amended articles of association do not comply with the requirements provided by legislation or contain misleading, unclear or contradictory provisions;
3) upon amendment of the articles of association, circumstances specified in clause 75 (1) 3) of this Act would arise;
4) amendment of the articles of association would not, for any other reason, be in the best interests of the unit-holders of investment funds managed by the pension management company.
(3) The Authority shall forward a decision concerning the approval of or refusal to approve amendments to articles of association to the pension management company which submitted the application immediately after making the decision.
(4) A decision to approve amendments to articles of association shall be appended to the application which is submitted to the commercial register. The pension management company shall immediately submit a copy of the judgment on entry in the commercial register made on the basis of the application to the Authority.
Division 3
Acquisition and Transfer of Qualifying Holdings
§ 97. Requirements for persons who have qualifying holding
A qualifying holding in a pension management company may only be held by persons who, in the opinion of the Authority, are able to ensure the sound and prudent management of the pension management company and whose business connections and structure of owners are transparent and do not prevent supervision from being exercised efficiently.
§ 98. Application for authorisation for qualifying holding
(1) If a person intends to acquire a qualifying holding in a pension management company or to increase a qualifying holding so that it exceeds one third, one half or two thirds of the share capital or votes represented by shares in a pension management company or if the pension management company would become a subsidiary of the person as a result of the transaction, the person is required to apply to the Authority beforehand for authorisation (hereinafter in this Division authorisation).
(2) In order to apply for authorisation, a written application shall be submitted to the Authority in which the size of the holding held by the applicant and of the intended holding are indicated. The information and documents specified in § 70 of this Act shall be appended to the application.
§ 99. Review of applications
(1) If, upon application for authorisation, an applicant fails to submit all the information and documents specified in subsection 98 (2) of this Act or if the information and documents are incomplete or are not prepared according to the requirements, the Authority shall request that the applicant eliminate the deficiencies.
(2) If it is not possible, on the basis of the information and documents submitted upon application, to verify whether an applicant meets the requirements provided for in this Act, the Authority may request that additional information and documents be submitted.
(3) In order to verify the information submitted by an applicant, the Authority may request that more specific information and documents be submitted and may perform on-site inspections pursuant to the procedure provided for in § 136 of the Investment Funds Act.
(4) If the applicant is a management company, credit institution, investment firm or insurer registered in a foreign state, the Authority shall, prior to making a decision, request the opinion of the corresponding supervisory agency of a State which is a Contracting Party to the EEA Agreement (hereinafter State which is a Contracting Party) on the acquisition of the holding.
§ 100. Decision on grant of authorisation
(1) The decision to grant or to refuse to grant authorisation shall be made by the Authority within three months after the receipt of a corresponding application by the Authority but not later than within one month after the receipt of all the necessary documents and information.
(2) If authorisation is granted, the Authority may set a term for the acquisition of a qualifying holding or the increase of the holding.
(3) If authorisation is refused, the reasons therefor shall be indicated in the decision. The decision shall be sent to the applicant immediately at the location indicated in the application.
§ 101. Refusal to grant authorisation
The grant of authorisation shall be refused if:
1) upon application for authorisation, not all the information and documents specified in § 70 of this Act or not all the additionally requested information and documents are submitted, if the information or documents submitted do not meet the requirements provided by legislation, or if the information or documents are incorrect, misleading, incomplete or incorrectly prepared;
2) the applicant does not meet the requirements provided by legislation or if circumstances specified in clauses 75 7) and 10) of this Act would arise if authorisation were granted;
3) the acquisition or increase of the holding may significantly restrict competition in the management of pension funds;
4) the financial situation of the applicant is not sufficiently secure or the financial statements of the applicant do not, in the opinion of the Authority, allow for a correct assessment to be made of the financial situation of the applicant;
5) the acquisition or increase of the holding may for any other reason significantly damage the compliance of the pension management company with the requirements provided by law and hinder the interests of the unit-holders of the pension fund from being promoted.
§ 102. Consequences of acquiring qualifying holding without authorisation
(1) A transaction by which a qualifying holding is acquired or a holding is increased and which is concluded without the authorisation of the Authority is void. In such case, the person who concluded the transaction shall not acquire the voting rights determined by the shares and the shares shall not be included in the quorum of the general meeting.
(2) If voting rights representing a qualifying holding acquired or increased by a transaction concluded without the authorisation of the Authority are included in the quorum of the general meeting of a pension management company and influence the adoption of a resolution of the general meeting, a court may, on the basis of a petition from the Authority, a shareholder or a member of the management board or supervisory board of the company, declare the resolution of the general meeting to be invalid if the petition is submitted within three months as of the adoption of the resolution of the general meeting.
§ 103. Revocation of authorisation
(1) The Authority may revoke authorisation if:
1) it becomes evident that, upon application for authorisation, the applicant submitted misleading, incomplete or inaccurate information or documents;
2) the activities of the person who has a qualifying holding or the representative thereof cause a significant risk to the sound and prudent management of the pension management company;
3) other circumstances provided for in § 101 of this Act arise.
(2) The provisions of § 102 of this Act apply to the revocation of authorisation.
§ 104. Notification regarding qualifying holding
(1) If a person intends to transfer shares in an amount which would result in the person losing a qualifying holding in a pension management company or if the person reduces the holding thereof such that it falls below one of the limits specified in subsection 98 (1) of this Act, the person is required to notify the Authority thereof within ten calendar days as of the conclusion of the corresponding transaction.
(2) Upon becoming aware of a transaction by which a qualifying holding is acquired, a pension management company shall promptly inform the Authority of the transaction. This obligation also applies to transactions specified in subsection (1) of this section and in cases where a holding is increased such that it exceeds one of the limits specified in subsection 98 (1) of this Act.
(3) A pension management company is required to submit the names of shareholders who own qualifying holdings and the sizes of their holdings to the Authority together with the annual report.
Division 4
Management of Pension Management Companies
§ 105. Requirements for managers of pension management companies
(1) Only persons who have the education, experience and professional qualifications necessary to manage a pension management company and who have an impeccable reputation may be elected or appointed as members of supervisory boards or management boards of pension management companies or as persons specified in clause 67 6) of this Act (hereinafter in this Division manager).
(2) Members of management boards of pension management companies shall have completed an academic education or education equal thereto and have experience of working in the financial field. The chairman of the management board or the director of a pension management company shall also comply with the requirements provided for in subsection 13 (3) of the Investment Funds Act.
(3) The following shall not be managers of pension management companies or members of the management board of the parent company of a pension management company:
1) persons whose act or omission has resulted in the bankruptcy or compulsory dissolution of a company or the revocation of the activity licence of a company;
2) persons who have been subject to a prohibition on business;
3) persons whose activities have shown that they are not capable of organising the management of a company such that the interests of the shareholders, members, creditors and clients of the company are sufficiently protected.
(4) The managers and employees of a pension management company are required to act with the prudence and competence expected of them, in accordance with the requirements for their positions and in the interests of the pension management company and unit-holders and other clients of the investment funds managed by the pension management company.
§ 106. Restrictions on office
(1) The manager of a pension management company shall not be a member of the supervisory board or management board of another management company, with the exception of a member of the supervisory board of a subsidiary of the same pension management company.
(2) A member of the management board of a pension management company shall not be a member of the management board of a credit institution, insurer or investment firm.
(3) A manager or employee of a management company holding an activity licence for the management of mandatory pension funds shall not be a manager or employee of the management board of the registrar.
§ 107. Notification regarding managers
(1) A pension management company is required to notify the Authority of the election or appointment of the managers and auditor of the pension management company and of their resignation or the initiation of their removal before the expiry of their term of office, and to submit documents specified in subsection (2) of this section to the Authority concerning managers within ten calendar days as of the corresponding decision being made or the corresponding application being received.
(2) Upon the election or appointment of a manager of a pension management company, the person who is to be elected or appointed shall submit the following to the pension management company:
1) an overview of his or her education, professional experience, business activities and punishments entered in the punishment register;
2) confirmation that no circumstances exist which, according to this Act, would preclude his or her right to be a manager of the pension management company.
§ 108. Removal of managers
(1) The Authority may issue a precept to demand the removal of a manager of a pension management company if:
1) it becomes evident that, in connection with the election or appointment of the manager, he or she has submitted misleading, incomplete or inaccurate information or documents;
2) the manager does not meet the requirements provided for in this Act;
3) the activities of the manager have shown that he or she is not capable of organising the management of the pension management company such that the interests of unit-holders and other clients are sufficiently protected.
(2) If a pension management company fails to comply with a precept specified in subsection (1) of this section in full or within the specified term, the Authority has the right to demand the removal of the manager of the pension management company through a court.
§ 109. Internal rules
(1) A pension management company shall establish internal rules to regulate the activities of its managers and employees which shall ensure compliance of the activities of the pension management company and its employees with legislation and resolutions of management bodies of the pension management company.
(2) Among other matters, the internal rules shall set out the following:
1) the procedure for prevention of conflicts between the interests of the pension management company and the personal economic interests of the managers and employees of the pension management company;
2) the procedure for exchange of information and documents within the pension management company;
3) relationships of subordination, the procedure for reporting and the delegation of rights, including the separation of functions upon the assumption of obligations, recording of services for accounting purposes and assessment of risks involved;
4) internal rules of procedure for application of international sanctions established on the basis of the International Sanctions Act.
(04.12.2002 entered into force 02.01.2003 - RT I 2002, 105, 612)
§ 110. Internal audits
(1) Pension management companies shall ensure the implementation of sufficient internal audit measures.
(2) A separate employee (or separate employees) shall be appointed to conduct internal audits or a contract shall be entered into with an auditor for the performance of the functions of an internal auditor.
(3) A person who conducts internal audits (hereinafter internal auditor) shall meet the requirements for managers of pension management companies. An internal auditor shall act independently of and shall not be connected to the subordinate units or employees of the pension management company the activities of which he or she audits.
(4) An internal auditor shall monitor the compliance of the activities of the pension management company and the managers and employees thereof with legislation, internal rules, good practice, the depositary contract, the contract entered into with the registrar and the resolutions of management bodies.
(5) The management board of a pension management company shall ensure that the internal auditor has all the rights and working conditions necessary for the performance of his or her duties, including the right to obtain explanations and information from the managers of the pension management company and to monitor the elimination of discovered deficiencies and compliance with proposals made.
(6) An internal auditor is required to forward any information concerning the pension management company which becomes known to him or her and which indicates a violation of law or damage to the interests of clients to the supervisory board and management board of the pension management company and the Authority immediately in writing.
Division 5
Fund Manager of Pension Fund
§ 111. Requirements for fund managers of pension funds
(1) Only persons who meet the requirements provided for in § 16 of the Investment Funds Act and who have adequate professional experience in order to manage a pension fund and an impeccable business and professional reputation may be fund managers of a pension fund.
(2) A fund manager who, within the last five years, has operated as a fund manager for at least one year or has been involved in the provision of securities portfolio management services for at least three years may be the fund manager of a mandatory pension fund.
(3) The fund manager of a pension fund is required to act with the prudence and competence expected of him or her, in accordance with the requirements for his or her position and in the interests of the unit-holders of the pension fund.
§ 112. Permission to appoint fund manager
(1) In order to appoint the fund manager of a mandatory pension fund, the pension management company shall apply each time to the Authority for corresponding permission (hereinafter in this Division permission).
(2) Upon registration of the rules of a mandatory pension fund, permission is deemed to be granted as of the entry into force of the decision provided for in subsection 83 (3) of this Act.
§ 113. Processing of applications for permission
(1) In order to apply for permission, a pension management company shall submit a corresponding application and the information specified in subsection 81 (3) of this Act to the Authority.
(2) In order to verify the information submitted upon application or to decide on the grant of permission, the Authority may request that more specific information and documents be submitted by the pension management company and the candidate for the office of fund manager of the pension fund and may perform on-site inspections pursuant to the procedure provided for in § 136 of the Investment Funds Act.
§ 114. Decision on grant of permission
(1) The Authority shall make a decision to grant or to refuse to grant permission within thirty calendar days after the receipt of the corresponding application by the Authority. In the event of refusal to grant permission, the corresponding justification shall be indicated in the decision.
(2) The grant of permission shall be refused if:
1) upon application, not all the information and documents specified in subsection 113 (1) of this Act or not all the information and documents additionally requested by the Authority are submitted;
2) information or documents submitted upon application do not meet the requirements provided by legislation or the information or documents are incorrect, incomplete, contradictory or incorrectly prepared;
3) the circumstance provided for in clause 84 5) of this Act arises.
(3) The Authority shall forward a decision concerning permission to the pension management company which submitted the application immediately after making the decision.
§ 115. Notification regarding fund managers
(1) A pension management company is required to notify the Authority of the appointment of the fund manager of a voluntary pension fund within ten calendar days as of the corresponding decision being made.
(2) The information and documents specified in clauses 81 (3) 1), 2) and 6) of this Act shall be appended to the notice provided for in subsection (1) of this section.
§ 116. Removal of fund manager of pension fund
The Authority may, by a reasoned decision, revoke a decision to grant permission and issue a precept to demand the removal of the fund manager of a pension fund if:
1) it becomes evident that, in connection with the appointment of the fund manager, the fund manager or pension management company has submitted misleading, incomplete or inaccurate information or documents;
2) the fund manager does not meet the requirements established for fund managers of pension funds in this Act or if the circumstance provided for in clause 84 4) of this Act arises;
3) the activities of the fund manager have shown that he or she is not able to ensure that the interests of the unit-holders of the pension fund will be promoted to the necessary extent.
Division 6
Mandatory Holding of Pension Management Company in Pension Fund
§ 117. Obligation to own units
(1) A pension management company shall own at least 1 per cent of the units of each pension fund managed by the pension management company. A pension management company shall not own any units of pension funds which the pension management company does not manage.
(2) Within three years as of the formation of a mandatory pension fund, the pension management company shall own at least 2 per cent of the units of the pension fund.
(3) If a mandatory pension fund has more than 100 million units, the pension management company shall hold at least 2 million units plus 1 per cent of the number of units exceeding 100 million.
(4) In order, for the purposes of this Division, to determine the proportion of units owned by a pension management company or person who has operated as a pension management company, the number of units owned by such person shall be divided by the number of units in the pension fund as registered by the registrar.
§ 118. Specifications for application of obligation to own units
(1) The provisions of § 117 of this Act do not apply:
1) to a voluntary pension fund for a period of six months after a pension management company assumes management of the pension fund;
2) to a mandatory pension fund for a period of three months after a pension management company assumes management of the pension fund;
3) under the conditions specified by the Authority for up to six months after units are cancelled pursuant to the provisions of § 127 of this Act.
(2) In the case provided for in clause (1) 1) of this section, a pension management company shall, not later than within two months following the takeover of a pension fund, own at least 0.5 per cent of the units of the pension fund which is taken over and, not later than within four months following the takeover, own at least 1 per cent of the units of the pension fund which is taken over.
(3) The term provided for in clause (1) 2) of this section may be extended to up to eighteen months with the permission of and under the conditions specified by the Authority.
§ 119. Obligation to own additional units
(1) In the cases provided by law, the number of units of a mandatory pension fund owned by the pension management company shall exceed the limits provided for in §§ 117 and 118 of this Act.
(2) Precepts concerning the obligation to own additional units and the conditions thereof are issued to pension management companies by the Authority.
§ 120. Acquisition and redemption of units
(1) Units of a pension fund shall be acquired by a pension management company (hereinafter in this Division acquisition of units) and units of a pension fund owned by a pension management company shall be redeemed by the pension management company (hereinafter in this Division redemption of units) under the conditions and pursuant to the procedure provided for in this Act, by legislation established on the basis thereof and in the rules of the corresponding pension fund.
(2) Corresponding permission is required from the Authority (hereinafter in this Division permission) for the acquisition and redemption of units. Permission is not needed if units are acquired or redeemed on the basis of a precept of the Authority pursuant to the provisions of §§ 119 and 125 of this Act.
(3) The provisions of this Division concerning pension management companies also apply, with regard to the redemption of units, to persons who no longer manage the fund of which the redemption of units they request.
(4) The Minister of Finance may, by a regulation, establish a more specific procedure for the acquisition and redemption of units and for application for permission therefor and the grant thereof.
§ 121. Application for permission
(1) In order to acquire or redeem units, a pension management company shall submit a corresponding application and the following information to the Authority:
1) the name of the pension fund;
2) the market value of the assets and the net asset value of the pension fund;
3) the number of units which have been issued but not redeemed;
4) the number of units owned by the pension management company and the proportion thereof in the total number of units;
5) the number of units the acquisition or redemption of which is applied for;
6) other information or documents established by the Minister of Finance.
(2) In order to review an application, the Authority may request that more specific information and documents be submitted by the pension management company.
§ 122. Decision on grant of permission
(1) The decision to grant or to refuse to grant permission shall be made by the Authority within five calendar days as of the receipt of a corresponding application by the Authority in the case of a voluntary pension fund and within ten calendar days in the case of a mandatory pension fund. In the event of refusal to grant permission, the corresponding justification shall be indicated in the decision.
(2) The Authority may grant permission for the acquisition or redemption of a lower number of units than the number indicated in an application or demand the acquisition of a larger number of units.
(3) At least the following shall be set out in a decision to grant permission:
1) the number of units which the pension management company may acquire or redeem;
2) the number of units which the pension management company is required to acquire or redeem;
3) the term for the acquisition or redemption of units;
4) the date on which the decision is made.
(4) The Authority shall forward a decision concerning the grant of permission to the pension management company which submitted the application immediately after making the decision.
(5) If the Authority does not forward a decision on the permission to acquire units to the pension management company within the term specified in subsection (1) of this section, permission shall be deemed to have been granted to the extent requested.
§ 123. Refusal to grant permission for acquisition of units
The Authority may refuse to grant permission for the acquisition of units if:
1) upon application, not all the information specified in § 121 of this Act or not all the information additionally requested by the Authority is submitted;
2) the information submitted upon application does not meet the requirements provided by legislation or the information is incorrect, incomplete or contradictory;
3) the issue and redemption of units of the voluntary pension fund is suspended;
4) after the acquisition of units, the pension management company would own more than 5 per cent of the units of the voluntary pension fund;
5) it becomes evident that the application is due to a revaluation of the market value of the assets and the net asset value of the fund or due to other circumstances which affect the net asset value of a unit and which the fund manager or members of the management board of the management company were or should have been aware of;
6) the acquisition of units would not be in the best interests of other unit-holders for any other reason.
§ 124. Refusal to grant permission for redemption of units
(1) The Authority shall refuse to grant permission for the redemption of units if:
1) the number of units owned by the pension management company after the redemption of units would be less than the limits provided for in §§ 117-119 of this Act;
2) the pension management company has failed to comply with a precept of the Authority concerning the acquisition of units of the pension fund;
3) the Authority has issued a precept specified in subsection 77 (3) of this Act to the pension management company and the precept has not been complied with;
4) the redemption of units is applied for by a person who managed a pension fund the management authority of which has been transferred to another pension management company and no more than six months have passed since the transfer;
5) the redemption of units is applied for by a person who managed a pension fund the management authority of which has been transferred to the depositary of the pension fund, until the management authority of the pension fund is transferred to another pension management company or until the pension fund is liquidated.
(2) In addition to the provisions of subsection (1) of this section, the Authority may refuse to grant permission for the redemption of units if:
1) circumstances provided for in clauses 123 1), 2) or 5) of this Act arise;
2) the issue and redemption of units of the pension fund is suspended;
3) the Authority has issued a precept to the pension management company and the precept has not been complied with or the term for compliance therewith has not expired;
4) no more than twelve months have passed since a bonus issue of units of the mandatory pension fund;
5) the redemption of units would not be in the best interests of other unit-holders for any other reason;
6) the pension management company has deferred payment of a quarterly contribution on the basis of subsection 67 (2) of the Guarantee Fund Act.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
§ 125. Acquisition and redemption of units at Authority’s request
The Authority may, by a precept, request that:
1) units of a pension fund be acquired if the number of units owned by a pension management company in a pension fund managed by the pension management company does not comply with the conditions provided for in §§ 117 and 118 of this Act;
2) units of a pension fund be acquired if circumstances specified in § 124 of this Act arise after permission is granted for the redemption of units;
21) units of a pension fund be acquired if this is necessary in order to guarantee compensation for the loss specified in subsection 127 (1) of this Act or to protect the interests of the unit-holders for any other reason;
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
3) units of a voluntary pension fund be redeemed if the pension management company owns more than 5 per cent of the units of the pension fund;
4) units of a pension fund be redeemed if circumstances specified in § 123 of this Act arise after permission is granted for the acquisition of the units;
5) units of a pension fund which are owned by a person who managed the pension fund be redeemed if more than nine months have passed since the management authority of the pension fund was transferred.
§ 126. Notification regarding acquisition and redemption of units
(1) A pension management company shall immediately notify the Authority of any acquisition or redemption of units of a pension fund.
(2) The notice specified in subsection (1) of this section shall set out at least the following:
1) the number of units acquired or redeemed by the pension management company;
2) the date of acquisition or redemption of the units (hereinafter date of transaction);
3) the number of units of the pension fund as registered by the registrar on the date of the transaction;
4) the net asset value of a unit on the date of the transaction and on the working day preceding and the working day following the date of the transaction.
§ 127. Compensation for loss by way of cancellation of units
(1) The units of a mandatory pension fund owned by a pension management company or a person operating as a pension management company (hereinafter in this section pension management company) shall be cancelled if the Supervision Authority ascertains that there has been a violation of the requirements provided by legislation or the pension fund rules which has caused loss to the unit-holders of the pension fund. The size of the loss shall be determined on the basis of all the proprietary damage caused, including any loss of profit compared to the situation where such violation would not have occurred and where the assets of the pension fund associated with the violation would have been invested similarly to the other assets of the pension fund. The Minister of Finance may establish the methods for determining the size of the loss.
(2) The Supervision Authority shall, by a precept, require a pension management company to acquire units in such amount that the total value of the units held by the company would be at least equal to the size of the loss provided for in subsection (1) of this section. The Supervision Authority shall immediately notify the registrar, the depositary and the Guarantee Fund of any such precept.
(3) The Supervision Authority shall issue a precept for cancellation of the units of a pension fund to the pension management company and immediately notify the registrar and the depositary of the precept. In addition to the information provided for in subsection 135 (1) of the Investment Funds Act, the precept shall set out the following:
1) the basis and description of the violation by which the loss was caused to the unit-holders;
2) the term during which the pension management company is required to determine the size of the loss caused to each unit-holder;
3) the term during which the loss caused to unit-holders by the pension management company is to be compensated for by way of cancellation of the units held by the pension management company.
(4) The registrar shall cancel the units held by the pension management company on the basis of a corresponding application by the pension management company. The list of information to be set out in the application shall be established by the Minister of Finance. The application shall be submitted to the Supervision Authority not later than thirty days before the expiry of the term specified in clause (3) 3) of this section. If the Supervision Authority does not submit objections within ten days after receipt of the application, the pension management company shall submit the application to the registrar for execution. The pension management company shall eliminate any deficiencies contained in the application by the due date established by the Supervision Authority.
(5) In compensation for cancelled units, units of the pension fund to which the unit-holder who suffered the loss makes mandatory funded pension contributions shall be acquired to the extent of the loss suffered. If the unit-holder has entered into an insurance contract for a mandatory funded pension or if the unit-holder is dead, units shall be acquired from the pension fund which received his or her last mandatory funded pension contribution.
(6) Any loss caused to the unit-holders and provided for in § 62 of the Guarantee Fund Act shall not be compensated for pursuant to the procedure provided for in this section.
(7) If the units of a pension fund are cancelled, no payments shall be made to the pension management company from the pension fund. The number of units of the pension fund shall be reduced by the number of cancelled units.
(8) No redemption fee or issue fee shall be applied upon the cancellation or issue of units under the conditions provided for in this section.
(9) Within three working days after the date of the precept provided for in subsection (3) of this section, a pension management company shall publish a notice in at least two daily national newspapers, setting out at least the following information:
1) the name of the pension fund to which the precept for cancellation of units was issued;
2) the procedure for notifying the unit-holders;
3) the terms specified in clauses (3) 2) and 3) of this section.
(10) A pension management company may contest the precept provided for in subsections (2) and (3) of this section in an administrative court within ten days after receipt of the precept.
(11) A unit-holder may contest the size of the loss for which he or she is to be compensated pursuant to a decision of the pension management company in a civil court within one month after becoming aware of the extent of the loss.
(12) The Minister of Finance shall establish the specific procedure for cancellation of the units of mandatory pension funds.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
§ 128. Claims of unit-holders in event of bankruptcy of pension management company
(1) In the event of the bankruptcy of a pension management company, claims against the pension management company from unit-holders of pension funds managed by the company shall be satisfied first after claims secured by a pledge.
(2) The provisions of subsection (1) of this section apply to a person who managed the pension fund for five years after the transfer of the management of the pension fund.
Chapter 8
Requirements for Activities of Pension Management Companies
§ 129. Management of pension fund
(1) A pension management company may operate only in the areas of activity provided for in § 63 of this Act.
(2) A pension management company may manage two or more mandatory pension funds only if:
1) this results from a merger of pension management companies;
2) this results from an assumption of the management of a mandatory pension fund;
3) pursuant to the rules of the pension funds, the investment policies of the mandatory pension funds managed by the pension management company differ significantly in the opinion of the Authority.
(3) The Authority shall determine a difference in the investment policies of pension funds based on the fundamental principles provided for in clause 34 (1) 3) of the Investment Funds Act, particularly taking into consideration the limitations on the investment of assets of a pension fund in different classes of securities. The specific conditions and procedure for determining significant differences in the investment policies of pension funds shall be established by a regulation of the Minister of Finance.
(4) A pension management company holding an activity licence for the management of mandatory pension funds is required to manage at least one mandatory pension fund, the rules of which prescribe that the pension management company may only enter into contracts specified in § 108 of the Investment Funds Act and may only invest the assets of the pension fund in:
1) securities specified in clauses 2 (1) 2) and 5) of the Securities Market Act;
2) derivative instruments specified in § 107 of the Investment Funds Act;
3) deposits specified in § 109 of the Investment Funds Act;
4) investment funds which may only enter into contracts specified in § 108 of the Investment Funds Act or may only invest the assets of the fund in the securities or deposits specified in clauses 1)–3) of this subsection.
(20.11.2002 entered into force 26.12.2002 - RT I 2002, 102, 600)
§ 130. Investment in shares
(1) The assets of a mandatory pension fund shall not be invested in shares to an extent greater than 50 per cent of the market value of the assets of the mandatory pension fund.
(2) The assets of a pension fund may be invested in shares only to the extent provided for in the rules of the corresponding pension fund.
(3) For the purposes of subsection (1) of this section, investments in investment funds the assets of which may, directly or through other investment funds, be invested in shares are also deemed to be investments in shares.
§ 131. Investment in securities
(1) The market value of the securities specified in subsection 105 (3) of the Investment Funds Act shall not total more than 5 per cent of the market value of the assets of a pension fund.
(2) The assets of a pension fund may be invested in the securities specified in clause 102 (1) 2) of the Investment Funds Act only to the extent provided for in the pension fund rules.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(3) In the pension fund rules, the limitations specified in subsection (2) of this section concerning securities shall be provided for each state where the securities are traded on regulated securities markets.
(4) Pursuant to the need to monitor protection of the interests of unit-holders, the Minister of Finance may establish additional restrictions on investment of the assets of mandatory pension funds in the securities specified in subsections 102 (1) and (3) of the Investment Funds Act.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
§ 132. Risk-spreading
(1) The value of securities issued by persons belonging to the same group shall not total more than 5 per cent of the market value of the assets of a mandatory pension fund, unless otherwise provided by this Act.
(2) The value of securities issued by persons belonging to the same group shall not total more than 10 per cent of the market value of the assets of a voluntary pension fund, unless otherwise provided by this Act.
(3) The value of securities issued or guaranteed by a state specified in § 104 of the Investment Funds Act shall not total more than 35 per cent of the market value of the assets of a pension fund.
(4) The limitations provided for in subsections (2) and (3) of this section do not apply until eighteen months after the registration of the rules of the voluntary pension fund, with the exception of cases where the net value of the assets of the pension fund exceeds 20 million kroons before the end of the term.
(5) The limitations provided for in subsections (1) and (3) of this section do not apply until nine months after the registration of the rules of the mandatory pension fund, with the exception of cases where the net value of the assets of the pension fund exceeds 50 million kroons before the end of this term.
§ 133. Investment in other investment funds
(1) The assets of a pension fund may be invested in the units or shares of other investment funds only to the extent provided for in the pension fund rules. The provisions of subsection 106 (2) of the Investment Funds Act do not apply to the investment of assets of pension funds. The value of units or shares of an investment fund shall not total more than 5 per cent of the market value of the assets of a pension fund.
(2) The assets of a pension fund may only be invested in the units or shares of investment funds which are registered in Estonia, a State which is a Contracting Party or another state provided for in the pension fund rules. The assets of a mandatory pension fund may be invested in the units or shares of investment funds only to the extent provided for in the pension fund rules, and the corresponding restrictions shall be provided broken down by the state where the investment fund is registered.
(20.11.2002 entered into force 26.12.2002 - RT I 2002, 102, 600)
(3) In the assets of a mandatory pension fund, the value of shares and units of investment funds managed by the pension management company which manages the mandatory pension fund shall not total more than 5 per cent of the market value of the assets of the pension fund, and the conditions provided for in subsection 106 (1) of the Investment Funds Act shall be met.
(4) In the assets of a mandatory pension fund, the value of shares and units of investment funds managed by management companies which are in the same group as the pension management company which manages the mandatory pension fund shall not total more than 30 per cent of the market value of the assets of the pension fund, and the conditions provided for in subsection 106 (1) of the Investment Funds Act shall be met.
(5) The assets of a voluntary pension fund may be invested in the units or shares of investment funds provided for in subsection 106 (1) of the Investment Funds Act only to the extent provided for in the pension fund rules, but such units or shares shall not total more than 50 per cent of the market value of the assets of the pension fund.
(6) In order to protect the interests of unit-holders, the Minister of Finance may establish additional restrictions on investment of the assets of mandatory pension funds in the units of investment funds.
(20.11.2002 entered into force 26.12.2002 - RT I 2002, 102, 600)
§ 134. Investment in deposits
(1) The assets of a pension fund may be invested in the deposits of credit institutions only to the extent provided for in the pension fund rules.
(2) The assets of a mandatory pension fund may only be invested in the deposits of a credit institution located in Estonia, a State which is a Contracting Party or another state provided for in the pension fund rules.
(3) The assets of a mandatory pension fund invested in the deposits of credit institutions shall not total more than 35 per cent of the market value of the assets of the pension fund.
(4) The assets of a pension fund deposited in a single credit institution or in credit institutions belonging to the same group shall not total more than 5 per cent of the market value of the assets of the pension fund.
(5) The provisions of subsections (3) and (4) of this section do not apply upon the liquidation of a pension fund, unless the Authority prescribes otherwise in its decision to grant permission for the liquidation of the pension fund as provided for in § 60 of this Act.
§ 135. Investment in immovables
(1) The assets of a pension fund may be invested to the extent provided for in the pension fund rules in immovables which are located in states specified in the pension fund rules. The provisions of subsections 110 (2) and (4) of the Investment Funds Act apply upon investment in immovables.
(2) The assets of a pension fund shall not be invested in immovables specified in subsection 110 (3) of the Investment Funds Act.
(3) Investments in immovables shall not total more than 20 per cent of the market value of the assets of a voluntary pension fund or more than 10 per cent of the market value of the assets of a mandatory pension fund.
(4) The acquisition cost of an immovable shall, at the time of acquisition, not total more than 5 per cent of the market value of the assets of a voluntary pension fund or more than 2 per cent of the market value of the assets of a mandatory pension fund. For the purposes of this subsection, adjacent immovables or immovables in close proximity to each other are deemed to be one immovable.
§ 136. Transactions permitted by pension fund rules
(1) Transactions specified in § 107 and subsection 108 (2) of the Investment Funds Act are permitted on behalf of a pension fund only if such possibility is expressly prescribed in the pension fund rules. It is prohibited, on behalf of a pension fund and by means of the specified transactions, to assume obligations for the pension fund which total more than 10 per cent of the market value of the assets of the pension fund, with the exception of obligations assumed with transactions specified in subsection 108 (4) of the Investment Funds Act.
(2) A unit-holder or a person with an equivalent economic interest shall not be a counterparty to a transaction specified in subsection 108 (2) of the Investment Funds Act.
§ 137. Violation of requirements and compensation for damage
(1) Violation of the requirements provided for in §§ 130–136 of this Act upon entry into a transaction does not render such transaction void, although the pension management company shall compensate the unit-holders of the pension fund for any damage caused by the violation.
(2) A pension management company is required to notify the Authority immediately in writing of any violation of the requirements provided for in §§ 130–136 of this Act or of the termination of any such violation.
(3) If the limitations provided for in §§ 131 and 133, subsections 130 (1) and (2), subsections 132 (1)-(3), subsections 134 (1), (3) and (4), subsections 135 (1), (3) and (4) and subsection 136 (1) of this Act are exceeded, the provisions of subsection 113 (3) of the Investment Funds Act apply.
§ 138. Fees and expenses
(1) Unless otherwise provided by this Act, the following shall be covered from a pension fund:
1) fees to the pension management company for the management of the pension fund (hereinafter management fee);
2) fees to a depositary for the provision of depositary services (hereinafter depositary’s charge);
3) transfer charges and service charges directly related to transactions performed from the pension fund (hereinafter in this Chapter transaction costs);
4) costs relating to borrowing provided for in subsection 112 (3) of the Investment Funds Act;
5) (Repealed - 20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
6) (Repealed - 20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(2) All fees and expenses related to the management of a pension fund which are not specified in clauses (1) 1)-6) of this section shall be covered by the pension management company.
(3) The following shall be covered by the pension management company of a mandatory pension fund:
1) the depositary’s charge for the management of the mandatory pension fund;
2) the fee charged by the registrar for organising the issue and redemption of the units of the mandatory pension fund, managing the pension accounts and performing other duties provided for in this Act (hereinafter registrar's charge);
3) contributions to the Pension Protection Sectoral Fund pursuant to the Guarantee Fund Act.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
§ 139. Rates of fees and expenses
(1) The size of the management fee and, in the case of a voluntary pension fund, the depositary’s charge shall be determined as a proportion of the market value of the assets of the pension fund and shall be indicated in the pension fund rules for a full year, where a year equals 365 days.
“(2) The registrar's charge consists of the maintenance fee and the entry fee. The size of the maintenance fee shall be determined as a proportion of the market value of the assets of a pension fund managed by the pension management company. An entry fee shall be charged for each act of issue and redemption of units of a pension fund performed by the registrar. A uniform maintenance fee and entry fee shall be applied to all mandatory pension funds under the same conditions and the registrar shall co-ordinate the limits for such fees with the Minister of Finance pursuant to the procedure provided for in subsection 23 (1) of the Estonian Central Register of Securities Act.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(3) The expenses provided for in clauses 138 (1) 1)–3) of this Act shall not exceed the limit provided by the pension fund rules.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(4) The management fee of a mandatory pension fund shall not exceed the limit established by the Minister of Finance. The limit may differ depending on the market value of the assets of mandatory pension funds or the structure of investments of the pension funds.
§ 140. Additional procedures upon making contributions and payments
A pension management company is required:
1) upon the issue or transfer of units of a voluntary pension fund to a successor who is a natural person, to document the given name, surname, personal identification code, or date of birth in the absence of a personal identification code, of the acquirer of the units, the number of units acquired, the issue price and the time of issue of the units;
2) upon the redemption of units of a voluntary pension fund, to document the basis for redemption, the given name, surname, personal identification code and date of birth (in the case of a legal person the corresponding business name and registry code) of the unit-holder or the successor thereof, the number of units redeemed, the time of redemption, and the size of the redemption fee, the payments and the amount specified in subsection 54 (4) of this Act.
Chapter 9
Depositary of Pension Fund
§ 141. Requirements for depositaries of pension funds
(1) The level of the organisational and technical administration of activities of the depositary of a pension fund, its financial situation, the competence and experience of the corresponding employees and its other resources shall be adequate to ensure the performance of functions prescribed for the depositary of a pension fund by law, in the depositary contract and in the contract specified in subsection 35 (1) and 53 (1) of this Act (hereinafter in this Chapter contract).
(2) Only a depositary which is an account administrator and which has operated as the depositary of a contractual investment fund for at least one year during the three years preceding entry into the depositary contract may be the depositary of a mandatory pension fund.
§ 142. Approval of depositary contracts
(1) Upon the establishment of a pension fund, the depositary contract shall be deemed to have been approved if the decision specified in § 83 of this Act to register the pension fund rules is adopted.
(2) If a depositary contract is entered into with a new depositary or if amendments to a depositary contract result in amendment of the pension fund rules, the depositary contract shall be deemed to have been approved if the permission provided for in subsection 86 (1) of this Act is granted.
§ 143. Application for approval of amendments to depositary contract
(1) In cases not specified in § 142 of this Act, a pension management company shall submit the following information and documents to the Authority for approval of the amendments to the depositary contract:
1) an application together with an explanation of the reasons for the amendments to the depositary contract;
2) the resolution of the management board of the pension management company concerning amendment of the depositary contract;
3) the resolution of the management board of the depositary concerning amendment of the depositary contract;
4) in the case of the depositary contract of a mandatory pension fund, the registrar’s opinion on amendment of the depositary contract;
5) the amendments to the depositary contract and the amended text of the depositary contract;
6) the amendments to the contract and the amended text of the contract, if it is necessary to amend the contract in order to amend the depositary contract;
7) proof of payment of the state fee.
(2) In order to verify the information submitted by a pension management company and to decide on approval, the Authority may request that more specific and additional information and documents be submitted by the pension management company, the depositary or the registrar and may perform on-site inspections pursuant to the procedure provided for in § 136 of the Investment Funds Act.
§ 144. Decision on approval of amendments to depositary contract
(1) The Authority shall make a decision to approve or to refuse to approve amendments to a depositary contract within ten calendar days after the receipt of the corresponding application by the Authority. In the event of refusal to approve, the corresponding justification shall be indicated in the decision.
(2) Approval shall be refused if:
1) upon application, not all the information and documents specified in § 143 of this Act or not all the additionally requested information and documents are submitted;
2) information or documents submitted upon application are contradictory, incorrect, misleading or incomplete;
3) any of the circumstances provided for in clause 84 1), 7) or 8) of this Act would arise if the depositary contract were amended.
(3) The Authority shall forward a decision concerning the approval of or refusal to approve amendments to a depositary contract to the pension management company which submitted the application and to the depositary of the pension fund immediately after making the decision. Decisions concerning amendments to the depositary contract of a mandatory pension fund shall also be immediately forwarded to the registrar.
§ 145. Approval of contract entered into with registrar
(1) A pension management company shall submit a contract and any amendments thereto to the Authority for approval prior to the entry into force of the contract or the amendments.
(2) The provisions of §§ 142-144 of this Act concerning depositary contracts and amendments thereto apply to the approval of contracts and amendments thereto with the specifications provided for in subsection (3) of this section.
(3) In order to obtain approval for amendments to a contract, a pension management company shall submit the following information and documents to the Authority:
1) an application together with an explanation of the reasons for the amendments to the contract;
2) the resolution of the management board of the registrar concerning amendment of the contract;
3) the resolution or opinion of the management board of the pension management company concerning amendment of the contract;
4) the resolution or opinion of the management board of the depositary concerning amendment of the contract;
5) the amendments to the contract and the amended text of the contract;
6) the amendments to the depositary contract and the amended text of the depositary contract, if it is necessary to amend the depositary contract in order to amend the contract.
§ 146. Requirements for activities of depositaries of pension funds
(1) In addition to the rights and obligations provided for in the Investment Funds Act, the depositary of a pension fund shall:
1) organise the exchange of units of voluntary pension funds;
2) organise the redemption of units of a pension fund in order to enter into an insurance contract for a supplementary funded pension;
3) together with the registrar, organise the exchange of units of mandatory pension funds;
4) together with the registrar and an insurer, organise entry into an insurance contract for a mandatory funded pension;
5) perform other functions arising from this Act, other legislation or the contract.
(2) The depositary of a mandatory pension fund shall inform the registrar of the issue price and redemption price and the size of the issue fee and redemption fee by the beginning of each working day.
(3) The provisions of §§ 83 and 90 and subsection 84 (2) of the Investment Funds Act concerning depositary contracts apply to obligations of depositaries with regard to contracts.
(4) Upon the liquidation of a pension fund, the depositary of the pension fund or the liquidators specified in subsection 51 (4) of the Investment Funds Act are required, upon making payments, to document the time each payment is made, the size of the payment, the given name, surname, and personal identification code of the unit-holder of the pension fund, or his or her date of birth in the absence of a personal identification code, or, in the case of a legal person, the business name and registry code.
Part 3
Funded Pension Insurance
Chapter 10
Mandatory Funded Pension Insurance
§ 147. Insurance contract for mandatory funded pension and conditions thereof
(1) An insurance contract for a mandatory funded pension (hereinafter in this Chapter contract) is an insurance contract with the mandatory conditions provided for in this Act, the purpose of which is to ensure that payments are made in equal or increasing amounts to a policyholder from the due date designated in the contract until the death of the person.
(2) Pursuant to a contract, the policyholder shall be a natural person. The policyholder and the insured shall be the same person.
(3) The proprietary rights arising from a contract shall not be security for a loan or encumbered in any other way.
(4) The interest rate used upon the calculation of annuity shall not exceed 3 per cent.
(5) The Minister of Finance shall establish the limit of technical profit arising from contracts payable to policyholders by insurers. Insurers shall obtain prior approval from the Authority for the method of calculating technical profit arising from contracts.
(6) Insurers who enter into contracts shall apply a uniform mortality table for both men and women.
(7) Upon entry into a contract, the parties thereto may only agree on terms which do not contradict the provisions of this Act.
§ 148. Requirements for insurers who provide mandatory funded pension insurance
(1) Insurers engaged in life insurance (hereinafter in this Chapter insurers) who meet the requirements provided for in this Act and the Insurance Activities Act and who have been issued an activity licence granting the right to engage in mandatory funded pension insurance have the right to enter into contracts.
(2) The minimum of the own funds of an insurer which engages in mandatory funded pension insurance shall be 45 million kroons.
(3) At least 50 per cent of the own funds of an insurer shall be invested pursuant to subsection 41 (3) of the Insurance Activities Act.
(4) The provisions of clause 41 (3) 10) of the Insurance Activities Act do not apply to the committed assets of insurers.
(5) An insurer shall obtain approval from the Authority for the terms of the contract not later than two months prior to the implementation thereof.
§ 149. Payments pursuant to contract
(1) Payments pursuant to a contract commence on the due date specified in the contract (hereinafter in this Chapter pensionable age) but not before the insured reaches retirement age.
(2) Payments shall be made at least once per quarter on the date specified in the contract.
(3) Payments shall be made until the death of the insured, including for the month during which the insured dies.
(4) The size of the payments made pursuant to a contract shall be determined at the beginning of the period of making payments.
§ 150. Guaranteed period
(1) A contract may be entered into including a provision for a guaranteed period which shall be not shorter than five years as of the commencement of pensionable age.
(2) In the case provided for in subsection (1) of this section, the beneficiary or beneficiaries specified in a contract shall be entitled to payments made pursuant to the contract if the insured dies during the guaranteed period. Payments shall be made until the end of the guaranteed period, including for the month during which the guaranteed period ends.
(3) The insured has the right, at any time, to name another person to replace the beneficiary specified in the contract.
(4) If a beneficiary who receives payments pursuant to a contract dies before the end of the guaranteed period, the insurance reserve balance shall form part of his or her estate.
(5) The insurance reserve balance shall be subject to succession only in the case provided for in subsection (4) of this section.
Chapter 11
Supplementary Funded Pension Insurance
§ 151. Insurance contract for supplementary funded pension
(1) An insurance contract for a supplementary funded pension (hereinafter in this Chapter contract) is an insurance contract with the mandatory conditions provided for in this Act, which provides for the payment of a pension to an insured person from the due date designated in the contract.
(20.02.2002 entered into force 01.03.2002 - RT I 2002, 23, 131)
(2) Insurers who deal in life insurance and to whom an activity licence for entry into contracts has been issued pursuant to this Act have the right to enter into contracts.
§ 152. Mandatory conditions of contract
(1) The policyholder and the insured shall be natural persons.
(2) A policyholder is required, pursuant to the contract, to pay insurance premiums pursuant to the procedure prescribed by law and in the contract. The insurer is required to pay a pension pursuant to the procedure provided for in the contract from the due date provided for in the contract.
(3) The payment of a pension may commence at the time provided for in the contract (hereinafter in this Chapter pensionable age), but not before the policyholder has attained 55 years of age, or, in the event of the total and permanent incapacity for work of the policyholder, as of the verification of such incapacity.
(4) A pension shall be paid periodically at least once every three months until the death of the policyholder, unless otherwise prescribed in the contract.
(5) A policyholder has the right to terminate a contract at any time until he or she attains pensionable age.
(6) An insurer has the right to terminate a contract on the basis provided for in clause 23 (1) 3) of the Insurance Act (RT 1992, 48, 601; RT I 1995, 26–28, 355; 1996, 23, 455; 40, 773; 1998, 61, 979; 1999, 10, 155; 27, 389; 2000, 53, 343; 2001, 43, 238; 48, 268) and on other bases provided by law.
(7) The proprietary rights arising from a contract shall not be security for a loan or encumbered in any other way.
(8) Upon entry into a contract, the parties thereto may only agree on terms which do not contradict the provisions of this Act.
Part 4
Implementation of Act
Chapter 12
Amendment and Repeal of Acts in Force
§ 153. Amendment of Investment Funds Act
The Investment Funds Act (RT I 1997, 34, 535; 1998, 61, 979; 2000, 10, 55; 57, 373; 2001, 48, 268; 79, 480; 89, 532, 93, 565; 2002, 23, 131; 53, 336; 63, 387; 102, 600; 105, 612; 2003, 23, 133; 51, 355; 88, 591) is amended as follows:
1) subsection 102 (1) is amended and worded as follows:
“(1) The assets of a fund may only be invested in securities which are freely transferable and comply with one of the following conditions:
1) the securities are traded on a regulated securities market of Estonia or a State which is a Contracting Party to the EEA Agreement;
2) the securities are traded on a regulated securities market of a state not specified in clause 1) of this subsection which is a member state of the International Organisation of Securities Commissions (IOSCO) and specified in the rules or articles of association of the corresponding fund;
3) the securities are not traded on regulated securities markets of states provided for in clauses 1) or 2) of this subsection but, pursuant to their conditions of issue, the securities shall be quoted on the stock exchange of a state specified in clause 1) of this subsection within twelve months after issue.”;
2) subsections (5) and (6) are added to § 115 worded as follows:
“(5) The auditor is required to notify the Financial Supervision Authority immediately in writing of any circumstances revealed in the course of an audit which result or may result in:
1) material violation of legislation regulating the activities of management companies and depositaries of funds;
2) interruption of the activities of the management company or significant damage thereto;
3) a situation or the risk of a situation arising in which the management company or depositary of the fund is unable to perform its obligations;
4) a qualified report by the auditor concerning the annual accounts of the management company;
5) an act by a member of the management board or supervisory board or an employee of the management company which causes or may cause significant proprietary damage to the management company, to unit-holders or shareholders of investment funds managed by the management company or to other clients.
(6) The duty to maintain the confidentiality of information which is imposed on an auditor by legislation or a contract does not extend to information forwarded to the Financial Supervision Authority pursuant to subsection (5) of this section.”
§ 154. Amendment of Income Tax Act
The Income Tax Act (RT I 1999, 101, 903; RT I 2001, 11, 49; 16, 69; 50, 283; 59, 359; 79, 480; 91, 544; 2002, 23, 131; 41, 253; 44, 284; 47, 297; 62, 377; 111, 662; 2003, 18, 105; 58, 387; 82, 549; 88, 587; 591) is amended as follows:
1) in subsection 18 (5), the words “Pension Funds Act (RT I 1998, 61, 979)” are substituted by the words “Funded Pensions Act (RT I 2001, 79, 480)”;
2) clause 19 (3) 1) is amended and worded as follows:
“1) that part of the total of the pensions paid by the Estonian state pursuant to Acts and the mandatory funded pension provided for in the Funded Pensions Act on a total amount which does not exceed three times the basic exemption provided for in § 23;”;
3) clause 19 (3) 2) is repealed;
4) subsection 20 (4) is amended and worded as follows:
“(4) Income tax is charged on payments made to a unit-holder or successor of a unit-holder on the basis of an insurance contract for a supplementary funded pension or from a voluntary pension fund, taking into account the specifications of subsection (5) and § 21.”;
5) subsections (41) and (42) are added to § 20 worded as follows:
“(41) Income tax is charged on payments made from a mandatory pension fund to the successor of a unit-holder and on payments made to a beneficiary pursuant to an insurance contract for a mandatory funded pension.
(42) If a person specified in subsection (41) of this Act attains the age which, pursuant to the State Pension Insurance Act, entitles the person to an old-age pension, income tax shall be charged on payments which the person receives pursuant to the State Pension Insurance Act and the Funded Pensions Act, with the exception of a supplementary funded pension to an extent of that part which exceeds three times the basic exemption.”;
6) subsection 20 (5) is amended and worded as follows:
“(5) Income tax is not charged on a pension paid to a policyholder pursuant to an insurance contract for a supplementary funded pension which meets the conditions of § 152 of the Funded Pensions Act after the policyholder has attained 55 years of age or after his or her total and permanent incapacity for work has been verified, on the condition that the insurance contract prescribes that corresponding payments shall be made in equal or increasing amounts at least once every three months until the death of the policyholder.";
7) section 21 is amended and worded as follows:
Ҥ 21. Insurance indemnities and payments from pension fund subject to tax at reduced rate
(1) The rate prescribed in subsection 4 (2) is applicable to the following payments made to a policyholder pursuant to an insurance contract for a supplementary funded pension which meets the conditions of § 152 of the Funded Pensions Act:
1) payments made by the insurer to the policyholder after the policyholder has reached 55 years of age but not before five years have passed since the contract was entered into;
2) payments made by the insurer in the event of the total and permanent incapacity for work of the policyholder;
3) payments made in the case of the liquidation of the insurer.
(2) The rate prescribed in subsection 4 (2) is applicable to the following payments made to a unit-holder of a voluntary pension fund established pursuant to the procedure provided for in the Funded Pensions Act:
1) payments made after the unit-holder has reached 55 years of age but not before five years have passed since the initial acquisition of units;
2) payments made in the event of the total and permanent incapacity for work of the unit-holder;
3) payments made from a voluntary pension fund in the case of the liquidation of the pension fund.”;
8) subsection 28 (1) is amended and worded as follows:
“(1) A resident natural person has the right to deduct the following from the income which he or she receives during a period of taxation:
1) that part of the insurance premiums paid during the period of taxation under an insurance contract for a supplementary funded pension which meets the conditions of § 152 of the Funded Pensions Act, the purpose of which is to ensure payment of the insured sum as a pension;
2) amounts paid to acquire units of a voluntary pension fund established in accordance with the procedure prescribed in the Funded Pensions Act, except in the cases prescribed in §§ 39 and 46 of the Funded Pensions Act.”;
9) section 281 is added to Chapter 4 worded as follows:
Ҥ 281. Contributions to mandatory funded pension
Contributions to a mandatory funded pension made pursuant to the Funded Pensions Act shall be deducted from the income of a resident natural person during a period of taxation.”;
10) subsection (21) is added to § 40 worded as follows:
“(21) Income tax shall be withheld from payments specified in clause 19 (3) 1) and subsection 20 (42) pursuant to the procedure established by the Minister of Finance.”;
11) in clause 41 6), the words “20 (1), (3) and (4)” are substituted by the words “20 (1), (11), (3), (4), (41) and (42)”;
12) subsection (5) is added to § 42 worded as follows:
“(5) Upon calculation of income tax to be withheld, contributions to a mandatory funded pension withheld on payments specified in clauses 41 1) and 3) pursuant to the Funded Pensions Act shall be deducted in each calendar month from the said payments.”
§ 155. Amendment of Estonian Central Register of Securities Act
The Estonian Central Register of Securities Act (RT I 2000, 57, 373; 2001, 48, 268; 79, 480; 89, 532; 93, 565; 2002, 23, 131; 63, 387; 110, 657; 2003, 51, 355; 88, 591) is amended as follows:
1) subsection (5) is added to § 2 worded as follows:
“(5) Securities specified in clause (1) 1) of this section which are tendered in a foreign state and which, pursuant to the conditions of issue, shall not be publicly tendered in Estonia need not be entered in the register.”;
2) in subsection 3 (2), the words “§§ 4 and 5” are substituted by the words “§§ 4, 5 and 51”;
3) section 51 is added to the Act worded as follows:
Ҥ 51. Pension account
(1) A pension account is a special type of securities account where only units of a mandatory pension fund provided for in the Funded Pensions Act are registered.
(2) Pension accounts shall only be opened for persons who have the right to own units of a mandatory pension fund according to the Funded Pensions Act.
(3) Any person may have only one pension account.
(4) In addition to the provisions of subsection 5 (4) of this Act, the following information shall be entered in a pension account:
1) the name of the mandatory pension fund the units of which the owner of the pension account acquires;
2) the time of registration of the units of the pension fund and the registry code of the units;
3) the basis for acquisition of units and making of entries (contributions, payments, exchange, and entry into, succession to or termination of an insurance contract for a mandatory funded pension, etc.);
4) information concerning the conditions for forwarding statements of holdings to the owner of the pension account (electronically through a computer network or by post).”;
4) subsections 7 (3) and (4) are amended and worded as follows:
“(3) The following persons and agencies may access the information provided for in subsections 5 (4) and 51 (4) of this Act, obtain extracts therefrom or submit enquiries regarding such information using a data exchange system based on data security measures and a computer network agreed on with the registrar:
1) the owner of the securities account or a person authorised by the owner;
2) agencies exercising state supervision pursuant to law;
3) courts during proceedings of matters;
4) bailiffs, in order to enforce a court judgment or secure an action;
5) agencies conducting preliminary investigation in criminal matters;
6) the Tax Board in connection with proceedings concerning matters pertaining to specific taxes or the performance of functions assigned to the Tax Board by the Funded Pensions Act;
7) notaries in connection with the performance of notarial acts;
8) trustees in bankruptcy in order to perform duties arising from law;
9) a stock exchange operator, in the exercise of supervision within the limits of the competence thereof.
(4) Information specified in subsection (3) of this section or extracts therefrom shall be issued and enquiries answered at the expense of the person requesting the information or extracts, except in the cases specified in clauses (3) 2)-7) and 9) and subsection (7) of this section.”;
5) subsections (31) and (7) are added to § 7 worded as follows:
“(31) In addition to persons provided for in subsection (3) of this section, the pension management company and depositary of the corresponding pension fund may obtain information from the registrar concerning the data entered in a pension account or data related thereto to the extent and pursuant to the procedure established by the Minister of Finance.”;
“(7) The registrar shall, to the extent and pursuant to the procedure established by the Minister of Finance, submit regular consolidated reports to the Tax Board, the Financial Supervision Authority and the Ministry of Finance concerning the information specified in §§ 4, 5, 51 and 6 of this Act.”;
6) subsection (3) is added to § 11 worded as follows:
“(3) The owner of a securities account shall notify the account administrator promptly of any changes in the information submitted by the owner upon opening the securities account.”;
7) subsection 88 (2) is amended and worded as follows:
“(2) An application for the entry of securities existing upon the entry into force of this Act and securities specified in clauses 2 (1) 1), 2) and 5) of this Act in the Estonian Central Register of Securities shall be submitted not later than by 1 September 2001. An application for the entry of securities existing upon the entry into force of this Act and securities specified in clause 2 (1) 4) of this Act in the Estonian Central Register of Securities shall be submitted not later than by 1 March 2002.”;
§ 156. Amendment of Social Tax Act
The Social Tax Act (RT I 2000, 102, 675; 2001, 50, 285; 59, 359; 79, 480; 91, 544; 95, 587; 2002, 44, 284; 62, 377; 111, 662; 2003, 82, 549; 88, 587; 591) is amended as follows:
1) in subsection 10 (1), the words "one banking day" are substituted by the words "fifteen banking days";
2) subsections (3), (4) and (5) are added to § 10 worded as follows:
“(3) If, pursuant to the Funded Pensions Act, an insurable person specified in clauses 5 2)-4) of this Act is required to make contributions to a mandatory funded pension, social tax calculated on remuneration specified in clauses 2 (1) 1), 3), 4) and 6) of this Act shall be transferred pursuant to subsection (4) of this section.
(4) In the case provided for in subsection (3) of this section, the Tax Board shall transfer social tax received in the special social tax account into the state pension insurance funds and the state health insurance funds of the state budget and to the bank account of the registrar of the Estonian Central Register of Securities in the Bank of Estonia within fifteen working days. The proportion of social tax transferred into the state pension insurance funds is 16 per cent, the proportion of social tax transferred into the state health insurance funds is 13 per cent and the proportion of social tax transferred to the bank account of the registrar of the Estonian Central Register of Securities is 4 per cent.
(5) Concurrently with the transfer of social tax specified in subsection (4) of this section, the Tax Board shall, pursuant to the procedure established by the Minister of Finance, forward the names and personal identification codes of persons and information concerning the amount of social tax transferred to the bank account specified in subsection (4) of this section to the registrar of the Estonian Central Register of Securities.”
§ 157. Partial repeal of Insurance Act
Sections 701 and 702 of the Insurance Act (RT 1992, 48, 601; RT I 1995, 26–28, 355; 1996, 23, 455; 40, 773; 1998, 61, 979; 1999, 10, 155; 27, 389; 2000, 53, 343; 2001, 43, 238; 48, 268) are repealed.
§ 158. Repeal of Pension Funds Act
The Pension Funds Act (RT I 1998, 61, 979; 2001, 48, 268) is repealed.
Chapter 13
Implementing Provisions
§ 159. Operating pension management companies
(1) Activity licences for the management of pension funds which have been issued by the Minister of Finance and are valid by the time of the entry into force of this Act shall be deemed to be activity licences for the management of a voluntary pension fund within the meaning of subsection 63 (2) of this Act.
(2) Pension management companies which are operating at the time of the entry into force of this Act shall bring their activities and their documents relating to the management of pension funds into conformity with the provisions of this Act within six months after the entry into force of this Act.
§ 160. Pension insurance based on income tax incentives
(1) Activity licences for pension insurance based on income tax incentives which have been issued by the Minister of Finance and are valid by the time of the entry into force of this Act shall be deemed to be activity licences for the provision of supplementary funded pension insurance.
(2) Insurers which are operating at the time of the entry into force of this Act shall bring their activities into conformity with the provisions of this Act concerning supplementary funded pension insurance within six months after the entry into force of this Act.
§ 161. Specifications for exercise of supervision
(1) Until 1 January 2002, the Securities Inspectorate established within the area of government of the Ministry of Finance shall have the rights and obligations of the Authority provided for in §§ 1-146 of this Act.
(2) Until 1 January 2002, the Insurance Supervisory Authority established within the area of government of the Ministry of Finance shall have the rights and obligations of the Authority provided for in §§ 147-152 of this Act.
§ 162. Implementation of obligation to make contribution
(1) Persons born before 1 January 1983 are not required to make contributions to a mandatory funded pension.
(2) Persons specified in subsection (1) of this section are entitled to make contributions to a mandatory funded pension and to acquire units of a mandatory pension fund if they submit a choice application as follows:
1) (Repealed - 15.05.2002 entered into force 07.06.2002 - RT I 2002, 44, 284)
2) persons born in 1942–1956, before 1 November 2002;
(15.05.2002 entered into force 07.06.2002 - RT I 2002, 44, 284)
3) persons born in 1957–1961, before 1 November 2003;
4) persons born in 1962, before 1 November 2004;
5) persons born in 1963, before 1 November 2005;
6) persons born in 1964, before 1 November 2006;
7) persons born in 1965, before 1 November 2007;
8) persons born in 1966, before 1 November 2008;
9) persons born in 1967, before 1 November 2009;
10) persons born in 1968, before 1 November 2010;
11) persons born in 1969, before 1 November 2011;
12) persons born in 1970, before 1 November 2012;
13) persons born in 1971, before 1 November 2013;
14) persons born in 1972, before 1 November 2014;
15) persons born in 1973, before 1 November 2015;
16) persons born in 1974, before 1 November 2016;
17) persons born in 1975, before 1 November 2017;
18) persons born in 1976, before 1 November 2018;
19) persons born in 1977, before 1 November 2019;
20) persons born in 1978, before 1 November 2020;
21) persons born in 1979, before 1 November 2021;
22) persons born in 1980, before 1 November 2022;
23) persons born in 1981, before 1 November 2023;
24) persons born in 1982, before 1 November 2024.”
(3) (Repealed - 15.05.2002 entered into force 07.06.2002 - RT I 2002, 44, 284)
(4) The provisions of this Act concerning obligated persons apply to persons who submit a choice application pursuant to subsection (2) of this section.
(5) A person specified in subsection (4) of this section, who submits a choice application on 1 June 2002 or later, is required to make contributions to a mandatory funded pension as of 1 January of the year following the year during which the choice application is submitted provided that the choice application is submitted by 1 November at the latest. A person who has submitted a choice application after 1 November but before 1 January of the following year is required to make contributions as of 1 January of the second year following the submission of the application.
(15.05.2002 entered into force 07.06.2002 - RT I 2002, 44, 284)
(6) Choice applications may be submitted pursuant to this Act as of 1 April 2002. Obligated persons who submit a choice application before 1 June 2002 are required to make contributions to a mandatory funded pension as of 1 July 2002. A person may amend his or her application until 1 June. A choice application which has been submitted cannot be withdrawn.
(15.05.2002 entered into force 07.06.2002 - RT I 2002, 44, 284; 20.11.2002 entered into force 26.12.2002 - RT I 2002, 102, 600)
(7) Obligated persons born in 1983 have the right and obligation to make contributions to a mandatory funded pension as of 1 July 2002.
(15.05.2002 entered into force 07.06.2002 - RT I 2002, 44, 284)
(8) Additional contributions specified in subsection 81 (1) of this Act to a mandatory pension fund shall be made for a person specified in subsection (4) of this section during the period of payment of the benefit specified in subsection 81 (1) as of the grant of the benefit but not before 1 January of the year following the year during which the choice application is submitted, provided that the choice application is submitted by 1 November at the latest. Additional contributions for a person who has submitted a choice application after 1 November but before 1 January of the following year shall be made during the period of payment of the benefit as of the grant of the benefit but not before 1 January of the second year following the submission of the application.
(10.12.2003 entered into force 01.01.2004 - RT I 2003, 82, 549)
§ 163. Specifications for change of pension funds
(1) The making of contributions to a new mandatory pension fund on the basis of an application provided for in § 12 of this Act may commence as of 1 January 2004.
(2) Mandatory pension funds may be changed as of 1 January 2005 pursuant to the procedure provided for in this Act.
(20.11.2002 entered into force 26.12.2002 - RT I 2002, 102, 600)
§ 164. Specifications for payments
(1) Payments from mandatory pension funds shall not be made and contracts provided for in § 19 of this Act shall not be entered into before 1 January 2009 unless otherwise provided by subsection (2) of this section.
(2) Payments from mandatory pension funds made pursuant to subsection 57 (1) of this Act shall not be made before 1 January 2007. In such case, the term provided for in the said subsection shall be calculated as of 1 January 2007.
§ 165. Application of minimum requirements
(1) The share capital of a pension management company shall comply with the provisions of clause 91 (1) 2) of this Act no later than by 1 January 2007. Until the expiry of the specified term, the share capital of a pension management company of a mandatory pension fund shall be at least 30 million kroons.
(2) The requirement provided for in subsection 148 (2) of this Act applies as of 1 January 2007.
§ 166. Limit of issue fee
Until 1 January 2005, the issue fee rate of units of pension funds shall not exceed 3 per cent.
§ 167. Implementing legislation
(1) The Minister of Finance shall establish the regulation issued on the basis of subsection 14 (3) of this Act by 1 December 2001.
(2) The Minister of Finance shall establish the regulation issued on the basis of subsection 40 (21) of the Income Tax Act no later than by 1 January 2009.
(3) The Minister of Finance shall establish the remaining implementing legislation issued on the basis of this Act no later than by 1 January 2002.
§ 168. Entry into force of Act
(1) This Act enters into force on 1 October 2001.
(2) Sections 6-11, clauses 79 1) and 4), subsections 81 (2), 119 (1) and 127 (1), clause 138 (1) 6) and § 156 of this Act enter into force on 1 July 2002.
(3) Clauses 154 2), 3), 5), 10) and 11) of this Act enter into force on 1 January 2002.
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RT = Riigi Teataja = State Gazette