The Seimas of Lithuania on Thursday gave its final backing to a proposed pension reform, with 76 votes in favor of the amendments to the Law on The Accumulation of Pensions, five against and 8 abstentions.
© Shutterstock

The amendments will stop the transfer of part of the social insurance SoDra's contribution to private pension funds. They will also change the private pension accumulation formula and make the SoDra the only payer of pension annuities.

The reform's supporters say it will help to put the pension system in order, separating private pension accumulation from its accumulation in the social insurance fund SoDra. And critics say it will only make the situation for future pensioners worse.

The planned automatic inclusion of workers into the II-tier pension accumulation has also come under criticism, and some critics are skeptical about making the SoDra the sole payer of annuities.

Under the amendments, residents will transfer 3 percent of their monthly salary to private pension funds, and the state will add 1.5 percent from the average monthly salary in the country.

To create favorable conditions for residents to provide funds for private pension accumulation, the SoDra contribution and the personal income tax rate will be reduced by 1 percentage point.

The changes also stipulate a new procedure for involving residents in the accumulation of their pension in II tier pension funds would also cut the deductions for pension accumulation companies.

Under the plan, the SoDra would become the centralized annuity payer as of 2020 (currently, life insurance companies provide pension annuities).

BNS
It is prohibited to copy and republish the text of this publication without a written permission from UAB „BNS“.
Leave a comment
or for anonymous commenting click here
By posting, you agree to terms
Read comments Read comments

Baltic States seek a single regional assessment

Ministers of finance of Lithuania, Latvia and Estonia, the European Commission and NASDAQ appealed...

LMT presents three digital service innovations at Baltic Mobile Congress

LMT (Latvian Mobile Telephone) is the telecommunications market leader in Latvia and a digital service...

CERN is considering the possibility of establishing business incubation centre

Last week, CERN delegation paid a visit to Kaunas University of Technology (KTU) Santaka Valley. The...

Israeli cloud services integrator chooses Vilnius for European base

TeraSky, a leading Israeli cloud solutions integrator, has just announced the opening of its European...

The popular French fashion brand „Gémo“ enters the Baltic States: first store in Lithuania – in 2019

The popular French fashion brand „Gémo“ entered the Baltic States - the first regional store was...