bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 25.06.2018 | Name days: Maiga, Milija

ERGO: 1st-tier of pensions hardly to ensure subsistence minimum

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU

Deniss Sazonovs

It is unlikely Latvia could abandon a pension system as such, however, the first tier of pensions could hardly ensure the subsistence minimum in future, Deniss Sazonovs, ERGO board member, told the business news portal BNN.

How big is ERGO market share?

Life insurance market share of ERGO Life Insurance SE Latvia branch accounted for 20% in late 2010. This ranks ERGO among the leading market players.

As opposed to risk insurance sector, life insurance market has been growing gradually over the past year in Latvia and the Baltics in general. If it was non-life insurance that showed better performance before the crisis in 2006-2007, now its life insurance sector that is expanding and we forecast it will grow 15% yearly in the coming years.

Do you agree to the social anthropologist Roberts Kilis that Latvia will abandon the pension system as such?

Discussions on the sustainability of the pension system are topical for sure, however, I believe it will not be abandoned completely. There will be huge changes as to the amount of pensions.

Generally speaking, there are a couple of reasons that raise fear about the sustainability of the pension system. First of all, the the number of tax payers has been dropping significantly, secondly, the shadow economy’s proportion is huge as well. Neither are there any signs it could shrink in near future. Moreover, the demographic situation is also sluggish, as birth rates keep falling while the proportion of pensioners is climbing.

This means people should be ready the retirement age will be raised, as there are no resources to increase pensions, given the fact that consolidation and the sovereign debt repayment are already carried out at the expense of the social budget.

Will people’s personal savings play a major role in future?

It is forecast already now those residents of Latvia whose income does not exceed the average monthly wage (about 465 lats) will receive not more than 50% of the monthly remuneration in pension payments. This applies to official income only, of course, thus it is already clear that pensions will not be big enough.

Third tier of pensions is the only key to ensure welfare. These are savings accumulated during working years. However, more and more people have started to save and, hopefully, this tendency is ongoing.

How big savings do Latvians make monthly?

ERGO data on the average yearly savings per a private person show it was about 258 lats, which means the average monthly sum accounts for 21.50 lats or 6-7% of the income.

People aged over 35 make savings most often and the key reasons for doing that are still the same – wedding, baby arrival, and credit liabilities. Their average income hits about 500 lats a month.

136 947 persons in total in the Baltics have purchased ERGO accumulated life insurance.

What impact did the crisis have on the saving habits of people in Latvia?

They did realize savings are crucial, that’s for sure. It is clear that it is more difficult to find free resources to save up during the crisis. According to ERGO and DnB Nord bank survey in late 2010, 70% of people in Latvia had not made any savings before the recession, which explains why the welfare of them was hit so dramatically.

Does the attitude towards savings differ among Latvians, Lithuanians and Estonians?

Despite, ERGO study shows 48% are not ready to make any savings at all, people now realize that making savings is practically the only way to ensure pension days and survive critical situations.

It is also crucial to point out that people’s thinking that a big salary is necessary to make savings is wrong as well. Practically, it is enough with 15 euro monthly payment. The earlier the person starts to save the better.

What are your forecasts for 2012?

ERGO first half-year estimate shows life insurance market keeps growing. Moreover, it is with great future prospects on both Latvian and the Baltic level.

Processes going on in the state such as the pre-election atmosphere, social budget cuts and other factors allow to expect dynamic years.

Moreover, there will be tougher competition in market shares redistribution and clients attraction. Similarly as last year, the insurance sector will keep consolidating processes as well and seek for ways to boost efficiency alongside with optimization of resources, so that investments bring maximum return.

 


Leave a reply

  1. Bil says:

    He has some good points.

KPV LV: someone is trying to ruin our party’s reputation

An attempt is being made to ruin KPV LV’s reputation, said Saeima deputy Artuss Kaimiņš at a press conference organized on Monday, 25 June, in relation to last week’s events, when Corruption Prevention and Combating Bureau detained Kaimiņš, Atis Zakatistovs and businessman Viesturs Tamužs.

Potential investors want ABLV Bank’s owned bank in Luxembourg

Several potential investors have voiced their interest in purchasing liquidated ABLV Bank’s owned ABLV Bank Luxembourg, says the bank’s liquidator Arvīds Kostomārovs.

Saeima deputy not called in to CPCB for repeated interrogation yet; avoids comments

Saeima deputy Askolds Kļaviņš has not yet been invited to come over to Corruption Prevention and Combating Bureau for a repeated interrogation. The politician said he may pick a lawyer to represent him only once he receives an invitation from CPCB.

EU introduces sanctions against Myanmar security officials for Rohingya crackdown

The European Union, acting relation to what sees as systemic human rights violations against the Rohingya people in the South-East Asian country of Myanmar, will introduce sanctions on seven security officials of the South-East Asian country.

Evidence in criminal case at risk in ABLV Bank’s self-liquidation process

Sergei Magnitsky’s former employer, Hermitage Capital Management, sent a request to Latvia’s law enforcement authorities on 21 June 2018, asking them investigate money laundering in ABLV Bank.

Average school exam scores in Estonia too low for University of Tartu

Pupils at Estonian secondary schools have taken their state examinations this summer and their average results show that the average potential student would not qualify for the University of Tartu, the highest ranking higher education institution in the Baltics and Eastern Europe.

NCP member turns to corruption watchdog over Lembergs daughter’s offshore network

Member of the New Conservative Party and former worker of Corruption Prevention and Combating Bureau Juris Jurašs has submitted a request to the bureau, asking for an investigation of materials published by journalists about offshore network of the daughter of the suspended Ventspils Mayor Aivars Lembergs’, according to an announcement on social media.

Estonia experiences safe Midsummer festival as «bonfire guards» registered for first time

Estonian traditional Midsummer festival of Jaanipäev has been a weekend of active work to the the Estonian Rescue Board, which introduced the voluntary registration of bonfire guards this year.

Italy sees risk to Schengen area as it seeks EU-wide responsibility for migrant arrivals

The European Union's area of border-free travel could be in trouble if no solution is agreed to the problem of cross-Mediterranean migration has stated Italy's Prime Minister Giuseppe Conte. At the informal meeting of 16 EU leaders in Brussels, Italy's new Prime Minister Giuseppe Conte called for shared EU responsibility for rescued migrants and penalties for countries refusing to accept quotas.

Police see no criminal violations in association’s words about «weapons unused at the right time»

Latvia’s Security Police say they found no signs of criminal violations in a statement released by Tēvijas sargi association regarding «a great purge» in Latvia and «weapons that went unused at the right time».

Erdoğan claims victory in Turkey's presidential election

The long-time leader of Turkey Recep Tayyip Erdoğan has received of over a half of votes in the first round of a presidential election to receive a new five-year term in power.

Weather to become summer-like again in Latvia this week

The beginning of the week will remain rainy in Latvia. However, as the anticyclone becomes stronger, precipitation will back off and air temperature will start gradually increasing. Weather will change again at the end of the week, as reported by Latvia’s State Environment, Geology and Meteorology Centre.

Week in Lithuania. Parliament makes first step towards disclosing ex-KGB agents

The Seimas of Lithuania on Thursday, June 21, backed an initiative by the opposition Electoral Action of Poles in Lithuania – Christian Families Alliance to disclose now classified information on former agents of the Soviet KGB who voluntarily admitted their collaboration.

BNN summary of the week: CPCB visit to Saeima; ministers survive no-confidence votes; DTV case ends with mild penalties

BNN offers a summary of this week’s topical news in a variety of categories: Ruling; Future; Trust; Measures; Calendar.

SRS uncovers numerous violations more than half of inspected companies

State Revenue Service’s Tax Control Office performed a total of 305 thematic inspections of employers in Latvia in Q1 2018. Authorities recorded violations in 171 inspections, according to information from SRS.

Third level pension plan deposit volumes reach new record value

Residents’ interest for pension savings remains high. The volume of deposits made to private pension funds in the first three months of 2018 has reached a new historic peak: a total of EUR 16.5 million has been paid to 3rd level pension accounts, which is 11.6% more when compared to the same period of 2017, as reported by Finance and Capital Market Commission.

Petrol station network in Latvia caught performing fraudulent activities with diesel fuel

State Revenue Service’s Tax and Customs Police have uncovered and put an end to a fraudulent scheme with diesel fuel performed by some network of petrol stations in Latvia, as confirmed by the service.

Kaimiņš: I believe CPCB is performing a political order

In the evening of Thursday, 21 June, Corruption Prevention and Combating Bureau released three people previously detained as part of a criminal process regarding possible illegal funding of KPV LV party – Saeima deputy Artuss Kaimiņš, his colleague Atis Zakatistovs, and businessman Viesturs Tamužs.

Latvia’s parliament conceptually supports new sanction regulations

On Thursday, 21 June, Saeima supported in the final reading amendments to the Law on International Sanctions and National Sanctions of the Republic of Latvia that are meant to improve sanction regime regulations to ensure efficient application of national and international sanctions, as reported by Saeima press-service.

Storm in Tallinn floods streets, cuts Croatia-Argentina match short on TV

A rain storm has hit northern Estonia on Thursday, flooding some streets in the capital Tallinn, damaged buildings and badly affected the broadcast of an interesting World Cup game.

American banks tested for financial stress show positive results

The U.S. has performed banking stress tests and found that the 35 largest banks operating in the country have enough funds on hand to sail safely through a severe financial crisis.

Saeima fires judge for coming to work in a drunken state

On Thursday, 21 June, Latvia’s parliament supported the proposal to dismiss Rezekne Court judge Arvis Garais from his post. 71 deputies voted in favour, no one abstained and no one voted against.

UK to have three requirements to EU citizens willing to remain in UK

For citizens of the European Union willing to continue living in the UK after the country leaves the bloc, they will have to submit applications and answer three key questions over the internet, according to the country's interior minister.

Weather in Latvia to be rainy and cool during Ligo; next week’s weather to be dry and hot

Weather at the end of the week in Latvia will be dictated by a cyclone. Because of that, there will be instances of rain on Ligo. Weather is expected to improve next week, however, according to Latvia’s State Environment, Geology and Meteorology Centre.

Lithuania’s blood plasma corruption scandal extends to Latvia

The former head of Lithuania‘s National Blood Centre, suspected of corruption and involvement in unlicenced activity, received more bad news this week from Latvia, where investigators of the Lithuanian Special Investigation Service had questioned the Latvian Health minister, Anda Čakša.

Most read

Most commented