TALLINN — The Estonian Ministry of Finance turned over a bill to the Cabinet of Ministers eliminate the fringe benefit tax on voluntary pension fund payments that do not exceed 15 percent of either the employee’s annual salary or €4,000.

The draft is based on a new ministry policy directive to allow greater freedom for pension fund contributors. The finance ministry proposes that [private_supervisor]pension fund contributors be allowed to switch pensions more than once a year to better adapt to changing market conditions and to avoid incidents such as Swedbank pension fund scandal last fall when the bank lost pension fund money in junk bonds. The bank then had to refund the losses out of its own wallet.

Märt Ots, general director of Estonian Competition Authority told the Postimees newspaper that the restriction on switching pension fund accounts to once a year does currently not in favor of shareholders.

“The rare changing option violates the interests of share holders, and does not let the new pension fund managers to operate,” said Ots.

The bill is opposed by banks. Agnes Makk, head of Swedbank investment funds said that while freedom of choice is important, investing in pension funds is a long-term investment unlike the buy/sell rapidity of stock exchange investments. Changing a pension fund frequently will accrue expensive charges, which would eventually be paid by the client.

“The frequent change of pension funds might even cause a loss for the client, for example when someone will change the fund after every market fluctuation,” Makk told Baltic Reports. “It must be remembered that additional costs come along with changing the fund.”

The act is planned to take effect in Jan. 1, 2010 but some amendments may take effect on April 1 or later. [/private_supervisor] [private_subscription 1 month]pension fund contributors be allowed to switch pensions more than once a year to better adapt to changing market conditions and to avoid incidents such as Swedbank pension fund scandal last fall when the bank lost pension fund money in junk bonds. The bank then had to refund the losses out of its own wallet.

Märt Ots, general director of Estonian Competition Authority told the Postimees newspaper that the restriction on switching pension fund accounts to once a year does currently not in favor of shareholders.

“The rare changing option violates the interests of share holders, and does not let the new pension fund managers to operate,” said Ots.

The bill is opposed by banks. Agnes Makk, head of Swedbank investment funds said that while freedom of choice is important, investing in pension funds is a long-term investment unlike the buy/sell rapidity of stock exchange investments. Changing a pension fund frequently will accrue expensive charges, which would eventually be paid by the client.

“The frequent change of pension funds might even cause a loss for the client, for example when someone will change the fund after every market fluctuation,” Makk told Baltic Reports. “It must be remembered that additional costs come along with changing the fund.”

The act is planned to take effect in Jan. 1, 2010 but some amendments may take effect on April 1 or later. [/private_subscription 1 month] [private_subscription 4 months]pension fund contributors be allowed to switch pensions more than once a year to better adapt to changing market conditions and to avoid incidents such as Swedbank pension fund scandal last fall when the bank lost pension fund money in junk bonds. The bank then had to refund the losses out of its own wallet.

Märt Ots, general director of Estonian Competition Authority told the Postimees newspaper that the restriction on switching pension fund accounts to once a year does currently not in favor of shareholders.

“The rare changing option violates the interests of share holders, and does not let the new pension fund managers to operate,” said Ots.

The bill is opposed by banks. Agnes Makk, head of Swedbank investment funds said that while freedom of choice is important, investing in pension funds is a long-term investment unlike the buy/sell rapidity of stock exchange investments. Changing a pension fund frequently will accrue expensive charges, which would eventually be paid by the client.

“The frequent change of pension funds might even cause a loss for the client, for example when someone will change the fund after every market fluctuation,” Makk told Baltic Reports. “It must be remembered that additional costs come along with changing the fund.”

The act is planned to take effect in Jan. 1, 2010 but some amendments may take effect on April 1 or later. [/private_subscription 4 months] [private_subscription 1 year]pension fund contributors be allowed to switch pensions more than once a year to better adapt to changing market conditions and to avoid incidents such as Swedbank pension fund scandal last fall when the bank lost pension fund money in junk bonds. The bank then had to refund the losses out of its own wallet.

Märt Ots, general director of Estonian Competition Authority told the Postimees newspaper that the restriction on switching pension fund accounts to once a year does currently not in favor of shareholders.

“The rare changing option violates the interests of share holders, and does not let the new pension fund managers to operate,” said Ots.

The bill is opposed by banks. Agnes Makk, head of Swedbank investment funds said that while freedom of choice is important, investing in pension funds is a long-term investment unlike the buy/sell rapidity of stock exchange investments. Changing a pension fund frequently will accrue expensive charges, which would eventually be paid by the client.

“The frequent change of pension funds might even cause a loss for the client, for example when someone will change the fund after every market fluctuation,” Makk told Baltic Reports. “It must be remembered that additional costs come along with changing the fund.”

The act is planned to take effect in Jan. 1, 2010 but some amendments may take effect on April 1 or later. [/private_subscription 1 year]

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