Latvia Stability Programme Report
PENSION REFORM UNDERPINS STABILITY OF PUBLIC FINANCES
Latvia is well positioned to withstand fiscal challenges arising from an ageing population
Age-related Spending, Projected Change
Latvia's Pension System And Recent Reforms
Latvia's reformed pension system consists of three tiers:
state compulsory unfunded pension scheme (the 1st tier)
state funded pension scheme (the 2nd tier)
private voluntary pension scheme (the 3rd tier)
On June 14, 2022, Latvian parliament approves pension indexing from
August 1. Indexes vary depending on CPI, years of service and working
conditions.
From 1 January 2014, the retirement age is gradually increased by three
months every year - until 1 January 2025, it will be 65 years. In period from
1st January 2022 till 1st January 2023 retirement age is 64 years and three
months.
From 1st January 2020, a person has the right to choose to whom to
transfer the capital accumulated in the 2nd tier, in case he or she dies before
the granting of the old-age pension, i.e.:
ā
ā
transfer the state pension to the special budget (then the capital will
be taken into account when calculating the survivor's pension);
add accumulated capital to another person's 2nd tier pension;
leave for inheritance in accordance with the procedures specified in the
Civil Law.
Source: The State Social Insurance Agency
The 2nd Tier Pension Net Assets (EUR billion, %
GDP)
11.0
9.0
7.0
5.0
3.0
1.0
-1.0
-0.8
-1.6
-3.0
Estonia
AA-/A1/AA-
France
AA/Aa2/AA
-0.6
Latvia
(2019-2070, % GDP)
6.1
6.2
5.4
3.8
3.4
1.6
Source: European Commission Ageing Report, May 2021
10.8
8.9
Latvia's age-related spending is among the
lowest in EU (2019, % GDP)
7.0
18.3%
17.3%
6.0
30
14.8%
6.0
5.0
12.2%
12.3%
25
10.9%
5.1
4.0
9.5%
4.5
20
8.5%
7.3%
15.3 15.8
3.0
6.1%
6.6%
3.6
15
13.2
3.3
2.0
2.8
2.3
10
2.0
10
1.0
1.7
1.5
1.2
0.0
2015 2016 2017 2018 2019 2020 2021
Ireland
AA-/A1/AA-
Lithuania
A+/A2/A
23
2011 2012 2013 2014
2nd tier pension net assets (EUR billion)
2nd tier pension net assets (% of GDP)
Source: Financial and Capital Markets Commission, Central Statistical Bureau of Latvia
Source: European Commission Ageing Report, May 2021
Latvia
A+/A3/A-
Estonia
AA-/A1/AA-
Slovakia
A+/A2/A
17.2
18.3 18.6
29.5
26.5
26.5
26.7
25.6
20.7
Czechia
AA-/Aa3/AA-
Slovenia
AA-/A3/A
Belgium
AA/Aa3/AA-
Finland
AA+/Aa1/AA+
Finland
AA+/Aa1/AA+
Austria
AA+/Aa1/AA+
France
AA/Aa2/AAView entire presentation