Financial Services, Good for Business, Latvia, Pensioners

The number of participants of the private pension funds rose by 4.6% or 11,811 people in the ten months of 2016. At the end of October, 266,823 people were saving money in private pension funds.

The banking association also informed that the average yield rate of the private pension funds has been 2.49% this year. Balanced pension funds that follow conservative investment policies have been showing the best results, as their yield has reached 2.61% on average this year. The average yield of active pension plans is 2.32%.

There are currently six private pension funds operating in Latvia (5 open pension funds and 1 closed pension fund), offering 15 various pension plans which differ by their investment strategy. 5 of the plans follow a balanced investment strategy and ten plans offer an active investment strategy.

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 implies that part of the social contributions by employees is invested in the finance sector, ensuring them bigger pensions in the future. The third pillar is operated by private pension funds based on voluntary contributions.