Government suggests stopping insurance payments to pension funds, funds to remain

Lithuanian Govt presents reform

Lithuania's government has suggested terminating payments from the state-run social insurer Sodra to second-pillar pension funds. Employees who want to continue the payments will be able to pay 4 percent of their salaries, with the state adding another 2 percent of the average monthly salary.

Ruling parties predict that new participants of the pension funds will receive old-age pensions that will reach at least 50 percent of their current wages.

The changes are envisaged in the new pension system reform presented by the government on Monday.

The Cabinet said that the average old-age pension would rise by an average of 23 euros in 2019-2020, increasing by a total of about 110 euros in the 2017-2020 period.

Second-pillar pension funds in Lithuania were launched in 2004. Currently, participants of these funds transfer 2 percent of their salary, and if the person contributes 2 percent form his own means, the state adds additional 2 percent of the country's average monthly wages.

Additionally, voluntary third-pillar funds operate in Lithuania.

Source: BNS
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