Loss subject to compensation
Date of compensation for loss and grant of compensation
Level of compensation
Giving notification to unit-holders
Term of compensation
Procedure for compensation
Loss not subject to compensation

Loss subject to compensation

Loss caused to the unit-holders of a mandatory pension fund for which the unit-holders have not been compensated by the pension management company by the due date established by the Supervision Authority shall be compensated for out of the Pension Protection Sectoral Fund under the conditions and pursuant to the procedure provided for in the Guarantee Fund Act.

For the purposes of the Guarantee Fund Act, loss is the loss provided for in subsection 32 (1) and (2) of the Funded Pensions Act according to which the Supervision Authority ascertains that there has been a violation of the requirements provided by legislation or the pension fund rules which has caused loss to the unit-holders of the pension fund. The size of the loss shall be determined on the basis of all the proprietary damage caused, including any loss of profit compared to the situation where such violation would not have occurred and where the assets of the pension fund associated with the violation would have been invested similarly to the other assets of the pension fund.

Date of compensation for loss and grant of compensation

The obligation of the Fund to compensate, under the conditions and pursuant to the procedure provided for in the Guarantee Fund Act, for any loss caused to unit-holders arises ten working days after expiry of the term specified in a precept of the Supervision Authority, if the pension management company fails to comply with a precept.

Immediately upon expiry of the term specified in a precept to the pension management company, the Supervision Authority shall send a notice to the Fund and to the registrar of the Estonian Central Register of Securities (hereinafter registrar) setting out information regarding the following:

• the pension management company which caused the loss;
• the pension management companies or depositaries managing the pension funds the unit-holders of which suffered loss;
• the other circumstances.

The Fund shall determine the amount of compensation to be paid to each person on the basis of the information submitted by the Supervision Authority, pension management company, registrar and other persons, pursuant to the provisions of  the Guarantee Fund Act.

Level of compensation

A unit-holder shall be compensated in full for loss subject to compensation out of the Sectoral Fund in the amount of up to 10 000 euro per specific loss event of the unit-holder. Any loss exceeding 10 000 euro per specific loss event of a unit-holder shall be compensated for to the extent of 90 per cent.

Giving notification to unit-holders

Within three working days after the date of receipt of the notice from the Supervision Authority, the Fund shall publish a corresponding notice in a daily national newspaper on at least two occasions. The notice shall contain at least the following information:

• the name of the pension fund with regard to which the decision was made;
• information as to when and how unit-holders can obtain information regarding the compensation granted to them;
• the procedure and terms for compensation.

After determination of the compensation, the Fund shall, at the request of a unit-holder, notify the unit-holder of the amount of compensation granted to him or her and of the related circumstances.

Term of compensation

Not later than within forty-five calendar days after receipt of the notice from the  Supervision Authority, the Fund shall:

• send the names and personal identification codes of the unit-holders entitled to receive compensation and the amounts of compensation granted to them to the registrar;
• transfer the amount of money necessary for compensation to the bank account indicated by the registrar.

The registrar shall compensate for loss pursuant to the procedure provided for of the Guarantee Fund Act within ten working days after receipt of the information and money.

At the request of the Fund or the registrar, the Supervision Authority may extend the specified terms of compensation with good reason.

If the Fund fails to compensate an entitled person for loss within the specified period, the person has the right to file a claim against the Fund. The limitation period for filing a claim shall be five years.

Procedure for compensation

The registrar shall, for the amount of compensation granted to a unit-holder, acquire for the unit-holder the maximum whole number of units of the pension fund to which the unit-holder makes mandatory funded pension contributions at the time of payment of the compensation.

If a unit-holder has entered into an insurance contract for a mandatory funded pension or if the unit-holder is dead, units shall be acquired for him or her from the existing pension fund of which he or she last acquired units. If all the pension funds of which the unit-holder has acquired units have been liquidated, the units of the pension fund indicated by the unit-holder or his or her successor shall be acquired for the compensation.

Upon acquisition of units, the issue fee shall not be charged.

Loss not subject to compensation

Compensation for loss shall not be paid out of the Sectoral Fund to a unit-holder who at the time of incurring the loss is:

1) a member of the management board or supervisory board or an auditor of the pension management company which caused the loss;
2) a member of the management board or supervisory board of the depositary of the given pension fund;
3) the fund manager of the given pension fund;
4) the spouse of a person specified in clause 1)–3) of this section;
5) a member or the spouse of a member of the management board or supervisory board of the parent company of the pension management company which caused the loss.