Principles for Ensuring Retirement Benefits for Members of Parliament
With the recent introduction of bills on pensions for MPs in mind, the Chancellery of the Riigikogu Economic and Social Information Department gathered background information on retirement benefits in other countries. This work gives a small overview of the results and offers some suggestions for reforming Estonia’s system.
The average pension last year in Estonia was 1,552 kroons (just under $100 a month), and this for people with 44 years of employment. In 2002, it was 1,620 kroons. With the average monthly salary increasing 12% from 2001-2002, the average pension increased only 1.3%. The Council of Europe social insurance charter, which Estonia has acceded to, says a pension should be at least 40% of the average wage, but Estonia’s was only 28.2%.
An MP’s pension constituted 69.4% of the average salary for MPs in 2001. This indicator shows Estonia as exceeding the average for the EU as well as that of countries with advanced social welfare systems like Finland (60%) and Germany (69%). It would be possible for Estonia to make the size of legislators’ pensions proportional to the average salary over the course of their career (Belgium, UK, Germany, Canada) or to the average in their last few years (Hungary, Czech Republic, Portugal) or the high salary point of their career (Norway, Sweden, Austria). This would mean the introduction of elements of the accumulated pension system.