In an estimate published on Thursday, the day the government endorsed a 5 percent pension increase for this year as a result of indexation, the Ministry of Social Affairs said it expects the rise in 2014 to be 6 percent.
Estonian ministry forecasts 6 pct pension rise for 2014
14th March 2013, 14:43
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The government indexes pensions once every year based on the national pension index that reflects the change in consumer prices and in the intake of the pension insurance component of the social tax last year. According to a proposal from the Social Affairs Ministry, this year's pension index is set at 1.05.
"At the time of the economic crisis, in 2010 and 2011, the danger arose that pensions would have to be reduced. Since the law sets out that pensions must never become smaller, they were preserved at the earlier level. Now, arising from the law, that has to be offset during a period of five years," Social Affairs Minister Taavi Roivas said.
In these years the calculated value of the pension index was below 1.0 but pensions were not cut.
From 2008 onwards the government is obliged to offset the difference between the calculated index and the actual change in pensions in the course of five years. A flexible mechanism of doing it has been chosen. The minister explained that as next year the offset factor will be only 0.6 percent, pensions will rise more.
The 5 percent increase endorsed by the government on Thursday would raise the old-age pension of a person with 15 years of pensionable service to 197.59 euros a month. With 44 years of pensionable service the new size of pension would be 334.42 euros a month.
There were 407,347 pensioners in Estonia at the beginning of this year.