From 01.11.2026: a cut in the funded pension share of social tax can take effect only five years after adoption

From 01.11.2026 at least five years must pass between the adoption and the entry into force of an amendment reducing the rate of the share of social tax transferred to the bank account of the pension register keeper (MKS § 4¹ lg 2) [1]. That share comes from the social tax calculated on the pay of a person who pays the mandatory funded pension (second pillar) contribution, and its rate is 4 percent (SMS § 10 lg 4) [2].

What changes

• Until now: § 4¹ of the Taxation Act contained only the general rule: as a rule at least six months must pass between the adoption and the entry into force of a tax act or its amendment, and the provision does not apply to a tax act or amendment that favours the taxable person [3]. That text stays unchanged as subsection 1 (MKS § 4¹ lg 1) [1].
• New subsection 2: an amendment reducing the rate of the share of social tax transferred to the bank account of the pension register keeper under § 10 subsections 4 and 4¹ of the Social Tax Act cannot enter into force earlier than five years after its adoption (MKS § 4¹ lg 2) [1]. Unlike subsection 1, subsection 2 does not contain the word „üldjuhul“ (translation: as a rule) [1].
• Which share: where an insured person is required under the Funded Pensions Act to pay the mandatory funded pension contribution, the Tax and Customs Board transfers 16 percent of the social tax to state pension insurance, 13 percent to state health insurance and 4 percent to the bank account of the pension register keeper (SMS § 10 lg 3 and 4) [2]. For a sole proprietor the same rates are set in subsection 4¹ (SMS § 10 lg 4¹) [2].

Who is affected

People who pay the mandatory funded pension contribution and part of the social tax on whose pay or income is transferred to the bank account of the pension register keeper (SMS § 10 lg 3, 3¹, 4 and 4¹) [2], and the legislator and drafters of tax bills (MKS § 4¹ lg 2) [1].

What to do

• Individuals need to do nothing: the provision sets a condition for amending the law, not for the taxpayer (MKS § 4¹ lg 2) [1].
• A bill reducing the 4 percent share of social tax transferred to the bank account of the pension register keeper must provide for entry into force at least five years after adoption (MKS § 4¹ lg 2, SMS § 10 lg 4) [1] [2]. Subsection 2 names only an amendment that reduces the rate [1].