Seimas backs pension reform
The Seimas of Lithuania on Tuesday backed a proposed pension reform, with 66 votes in favor of the amendments to the Law on The Accumulation of Pensions, 18 against and 17 abstentions.
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 final vote on the changes is scheduled later this week.
Under the amendments, residents will transfer 3 percent of their salary to private pension funds, and the state will add 1.5 percent.
The changes also stipulate a new procedure for involving residents in the accumulation of their pension in II tier pension funds. Persons who joined pension funds before Dec. 31, 2018 will be able to ask their pension accumulation company until Jun 30, 2019 to terminate their participation in the pension accumulation scheme or stop the transfer of their contributions.
The reform also introduced the following forms of pension payments: pension annuities (deferred and standard) with a proposed compulsory limit of 10,000 euros; a one-off payment, and regular payments. Under the plan, the SoDra would become the centralized annuity payer as of 2020 (currently, life insurance companies provide pension annuities).
The proposed amendments would also cut the deductions for pension accumulation companies as of the start of the next year to 0.8 percent of the average annual value of the accumulated amount, going further down to 0.65 percent from 2020 and to 0.5 percent from 2021.