According to the Pensionikeskus website, Estonia's second pillar pension funds delivered an average return of 6.9 percent last year. Third pillar funds fared better, with an average return of 8.8 percent.

While these figures fall short of the previous year's exceptionally strong 18.5 percent combined average return for second and third pillar funds, they still outperformed the historical average, which has been below 5 percent.

LHV's pension funds were the top performers in 2025, according to Pensionikeskus. In the second pillar, the Julge fund posted a 16.6 percent return, Ettevõtlik returned 13.3 percent and Indeks 11.4 percent. In the third pillar, LHV's Aktiivne III fund led with a 17.6 percent return.

Kristo Oidermaa, fund manager at LHV Asset Management (LHV Varahaldus), described the year as highly successful for the bank's pension funds. The strong performance was driven by equity investments that deviated from standard indexes, he said.

"We've been heavily invested in gold for years and, in 2025, our physical gold holdings rose by more than 40 percent, while gold mining stocks more than doubled in value. We also saw strong returns from positions in the European banking sector, global copper mining companies and traditional energy firms such as Fortum in Finland. These investments allowed LHV's equity portfolio to significantly outperform broader stock markets," Oidermaa said.

He added that a key contributor to LHV's success was the weakening of the U.S. dollar against the euro. "Our funds are hedged against dollar depreciation using financial instruments, so we didn't incur losses. However, the dollar's decline did affect the returns of U.S. indexes for European investors," Oidermaa noted.

Luminor's second pillar funds performed in line with the Estonian average last year. Its best performer was the Luminor Indeks pension fund, with a return of 7.8 percent.

Among SEB's funds, the top performers were the 18+, 55+, and Indeks pension funds, each delivering returns between 7.5 and 8 percent.

Swedbank's best-performing funds were those aimed at individuals born between 1970–79 and 1980–89, both of which posted returns of 7.8 percent.

Tuleva's two pension funds — the Maailma Aktsiate Pensionifond and EPI-II, a second pillar general index fund — both posted returns of over 8 percent last year. The only Estonian pension fund to finish the year in negative territory was Tuleva's Maailma Võlakirjade Pensionifond, which recorded a return of -0.55 percent.

Tuleva board member Tõnu Pekk told ERR that while global stock markets have indeed delivered above-average annual returns of more than 12 percent over the past five years, that alone doesn't explain the improvement in returns for Estonia's second and third pillar pension funds.

"Five or six years ago, second pillar funds in Estonia mostly held contributors' money in low-yield bonds or even in bank deposits. Less than 40 percent of second pillar assets were invested in equities or other equity-like instruments such as real estate. As a result, strong returns in equity markets at the time didn't benefit Estonian savers much: even though global equities returned 10 percent annually from 2016 to 2020, Estonia's second pillar funds returned just over 3 percent per year," he said.

Currently, nearly 90 percent of Estonians' second pillar assets are invested in equity-based instruments. More than one-third of savers' money is now in low-cost index funds, Pekk noted. "That's why, over the past five years, Estonians have received a much fairer share of global market returns — the average second pillar return over that period has been nearly 8 percent annually," he said.

What will 2026 bring?

Both 2025 and 2024 were strong years for pension funds in the equity markets. However, there has been consistent caution that the overall rally cannot continue indefinitely and that much depends on how markets assess the future prospects of major tech companies.

"There's still a high level of speculation in that sector," said LHV's Oidermaa. He added that political uncertainty — particularly in the U.S. — adds to the unpredictability. "Valuations in equity markets remain high and speculative positions are significant in certain market pockets, such as the AI boom on U.S. exchanges," he said.

Pekk noted that, over the long term, equities are likely to offer better returns than bonds and low fund fees allow savers to retain more of those returns. "That's why I believe the average return of Estonian pension funds in the coming years won't lag as far behind global markets as it has in the past," he said.

Still, pension fund investment strategies are not solely tied to the performance of equity markets. Funds diversify both geographically and by asset class. Estonian companies are also playing an increasingly prominent role in portfolios.

Oidermaa noted that local real estate investments and bonds issued by Estonian companies provide portfolio stability during times of market turbulence.

"We've also invested in private equity — that is, in non-listed companies — whose valuations haven't surged the way public equities have. The returns from these investments come primarily from revenue and profit growth in the companies themselves," he said.

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