Analytics, Financial Services, Latvia, Legislation, Pensioners

Among all new pensions calculated last year, 19% were up to EUR 150 a month, 27% were EUR 150-250 a month, and 29% were EUR 250-350 a month.

Only 13% of all new pensions were EUR 350-500 a month, and 10% were EUR 500-1,000, while just 2% of the new pensions were over EUR 1,000 a month.

Such a situation has been caused by a number of factors, including the fact that 35% of all tax payers make social insurance contributions from the minimum wage or even a lower amount of income.

Last year the average monthly old-age pension in Latvia was EUR 306.81 a month. The average retirement age last year was 61.5 years, while 19% of new pensioners applied for early retirement.

As many as 1.254 million people have joined the second-pillar government-funded pension scheme, having accumulated EUR 2.33 billion in aggregate capital, with the average sum accumulated per participant reaching EUR 1,862.

At the same time, 255,013 people have joined the third-pillar or private pension plans, including 78% individual participants and 22% employers making contributions for their employees. The average sum accumulated under the private pension plans is EUR 1,296, while the aggregate capital reached EUR 330 million last year.

Latvia’s pension system was reformed in 1996. Latvia has a three-pillar pension system. The first-pillar pensions are paid to the existing pensioners from the social contributions made to the state budget. The second or government-funded pension level means that part of the social contributions is invested in the finance sector, ensuring bigger pensions in the future. The third pillar is operated by private pension funds based on voluntary contributions.