Average pension rises to 817 euros

Pensioners. Photo: Tairo Lutter

This year's state pension index, approved by the Estonian government, has increased the average old-age pension from 774 euros to 817 euros and the national pension to 393 euros per month as of April 1.

To keep pensions in balance with changes in wages and prices, pensions are recalculated every spring.

The income of senior citizens in Estonia is among the lowest in Europe. In 2023, the median net income of people over 65 in Estonia divided by the median net income of working-age people was 55 percent, compared to an average of 86 percent in the European Union. By 2024, Estonia's figure had risen to 61 percent.

In 2023, pensions were increased by 13.9 percent and last year by 10.6 percent. To secure the situation of the elderly, the government has also established a higher basic exemption for pensioners, which is 776 euros.

The amount of the national pension after indexation is now 393 euros. The base amount is 377 euros and the annual price 10 euros. In 2025, the estimated cost of indexing pensions is 124.5 million euros and the pensions of approximately 325,000 pensioners have been indexed.

The basic exemption for old-age pensioners has been fixed at 776 euros per month in 2025, regardless of the size of their income. If the pension is greater than 776 euros, income tax must be paid only on the portion exceeding this amount. Starting in January, income tax is withheld at 22 percent instead of the previous 20 percent. Income tax is withheld from pensions, compensation for damages, child leave payments, and parental benefits.

Pensions in Estonia are indexed on April 1 every year. The value of the index applied to pensions upon annual indexation is calculated to the extent of 80 percent based on the annual increase in receipts of the pension insurance portion of social tax and to the extent of 20 percent based on inflation. The pension index is also used to index the daily rate of the Unemployment Insurance Fund's work ability allowance as well as compensation for damage in the event of an accident at work and occupational disease.

From April 1, the daily rate of the work ability allowance is 21.74 euros, of which the allowance per calendar day for partial work ability is 57 percent of the daily rate, or an average of 371 euros per month, and for no work ability is 100 percent of the daily rate, or an average of 652 euros per month.