Financial Services, Funds, Good for Business, Latvia, Pensioners

The number of participants of the private pension funds rose by 0.9% or 2,368 people in the two months of 2017. At the end of February 2017, there were 274,605 people saving money in private pension funds.

The average yield rate of the private pension funds was 1.4% this year. Balanced pension funds that follow conservative investment policies showed a yield of 1.04 % on average, while the average yield of active pension plans was 2.12%. The only conservative pension plan had a negative yield of minus 0.25% in January-February.

There are currently six private pension funds operating in Latvia (5 open pension funds and 1 closed pension fund), offering 17 various pension plans which differ by their 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.