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Latvia retirement age to reach 65 by 2021

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  • Latvia retirement age to reach 65 by 2021

LATVIA - The retirement age in Latvia will gradually increase to 65 by 2021 at the rate of half a year annually, as part of reforms to the pension system.

In a letter of intent addressed to the International Monetary Fund (IMF), published earlier this month, Latvia outlined plans to implement changes to the pension system from January 2011 in an attempt to help cut its budget deficit.

The document noted that to preserve the sustainability of the three-pillar pension system, it intended to prepare a pension reform "with international assistance and in close cooperation with social partners before 1 July 2010". The reforms would also include a review of all "special pension regimes". (See earlier IPE article: Latvia plans pension changes from 2011)

Although the exact form of the pension proposals are not expected to be confirmed until the middle of 2010, the Ministry of Welfare has confirmed plans to increase the state retirement age.

It said: "The problem of an ageing society is urgent in all Europe, and in Latvia people will also have to prepare for a longer stay in the labour market."

The proposal is for the retirement age to increase to 62.5 years in January 2016, to 63 in 2017, and 63.5 in 2018, with half yearly increases until it reaches 65 in January 2021.

The Ministry has meanwhile confirmed that as a result of the recent financial crisis the government had reduced the social contributions to the second pillar - the state mandatory funded pension scheme - from 8% to 2% since May 2009.

It claimed this has been done in an attempt to "increase the income of the social insurance budget" to allow it to meet its duties to current recipients of pensions and benefits following the latest instability of the financial market.

However, it noted recent amendments to the Law on State Funded Pensions mean that although 2% of contributions will be transferred to the funded scheme in 2009-10, this will increase to 4% from 2011 and 6% from 2012. (See earlier IPE article: Latvia to tackle budget deficit with pension cuts)

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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