Comparison of the market of second pillar pension funds in Latvia and Estonia

The first pension system was established over a century ago, and it has remained a fundamental and important aspect of people's lives ever since. However, according to many studies, most people think of pensions as complicated, and they are scared to make decisions when it comes to understanding and picking the right pension fund and where to invest their money (Citizens Advice Bureau, 2015). The pension system consists of parts of different schemes: compulsory (often called the first pillar) and voluntary (usually called second and third pillar). The first pension pillar provides for today's retirees, and the amount of the pension is determined by demographics. It is necessary for today's retirees to have enough money to provide for themselves. The second pension pillar consists of the state funded or accumulated pension schemes. It provides people with the opportunity to develop additional savings to the old age pension provided by the first pension pillar, which is mandatory for everybody. Latvian and Estonian pension system are often compared and considered to be very similar, however many things over time have changed - starting from different law changes to number of contributions, general opinion, and position of public about saving for the retirement and more. The topic of the bachelor thesis “Comparison of the market of second pillar pension funds in Latvia and Estonia” has been chosen based on its topicality in
both countries, as it affects every inhabitant living and working there.…