bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Ceturtdiena 21.09.2017 | Name days: Matīss, Modris, Mariss

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.

    Thumb up 0 Thumb down 0

KNAB to procure 66 high-class safes for EUR 78,000

Latvia’s Corruption Prevention and Combating Bureau announced last week a procurement procedure for 66 first-class safes, as confirmed by KNAB and Procurement Monitoring Bureau.

Comprehensive Economic and Trade Agreement between EU and Canada comes into force

On Thursday, 21 September, the Comprehensive Economic and Trade Agreement between the European Union and Canada came into force, as confirmed by European Commission’s r press service in Latvia.

Ašeradens: productivity of Latvia’s economy is far behind Europe

Productivity of Latvia’s economy is far behind Europe – 43% behind the average productivity level in the European Union is actual prices, said Economy Minister Arvils Ašeradens in an interview to Neatkarīgā newspaper.

In pictures: Diversity of heads of state UN General Assembly

What suits and costumes have been chosen by presidents of 12 countries in several continents? BNN has compiled a picture gallery devoted to the UN General Assembly taking place this week in New York.

LVSADA is satisfied with healthcare funding legislative draft

The council of Latvian Health and Social Care Workers' Union has decided to conceptually support healthcare funding legislative draft, which was developed in cooperation with Healthcare Ministry, Association of Latvian Hospitals and Latvian Employers’ Confederation.

Riga Airport becomes part of TOP 5 of Europe’s rapidly growing airports

16.2% passenger number increase has allowed Riga International Airport to become one of five most rapidly growing airports in Europe in July. Riga airport has entered the group of airports whose number of serviced passengers reaches 5 – 10 million a year, according to information compiled by Airport Council International.

Producer prices in Estonia rise 4.7% August-to-August

The producer price index of industrial output in Estonia has from July to August this year grown by 0.8%, but from August last year – by 4.7%, Estonian statisticians have estimated.

Nordea and DNB merge to officially happen on 1 October

In accordance with the recent decision of the European Commission to approve the plans of Nordea and DNB Bank to merge their activities in Baltic States, the business deal will take place officially on 1 October 2017.

Kaljulaid in UN underlines effects of climate change and lack of women in peace talks

As the Estonian President Kersti Kaljulaid made her first address at the UN General Assembly on Tuesday, September 19, she pointed out to world leaders effects of climate change and need to involve more women in peace talks.

Pabriks: Russia failed to intimidate anyone with Zapad exercises

Information acquired during Zapad 2017 military exercises will be enough to assess the tactics used and strategy, said MEP Artis Pabriks in an interview to Rīta panorama programme of LTV.

Latvian Court Administration invests in development Georgia’s court system

Latvian Court Administration opens Twinning project in Tbilisi, Georgia. This project provides for supporting rule of law and independence of court in Georgia to improve the professionalism of judges and court employees, as reported by Court Administration’s European Social Fund project manager Anna Skrjabina.

Spanish police seizes documents related to Catalonia referendum

As Spanish central government seeks derail the October 1 Catalonian independence referendum, which has been banned by the country's Constitutional Court, police in the autonomous region has seized boxes of documents related to holding the vote.

Court orders Loginovs and Pečaks to pay back illegally spent finances

Riga Regional Court has ordered former Riga Freeport CEO Leonids Loginovs and his deputy Aigars Pečaks to repay illegally spent finances in the amount of EUR 856,951.

Mexico shaken by tragic 7.1-magnitude earthquake

Buildings in Mexico City collapsed as a powerful, 7.1-magnitude earthquake struck in central Mexico taking the lives of no less than 220 people.

VNT director: I’m not desperate, managing such challenges is why we are here

Increase of infrastructure tariffs means cargo transports in Latvia’s direction will also become more expensive. In spite of that, Ventspils nafta terminals as a competitive commercial company that is interested in carrying cargoes from Belarus and Russia will definitely pay attention to tariff prices. «And in this case we are not the most competitive,» VNT Managing Director Lars Pantzlaff comments the situation over the plans of Latvijas Dzelzceļš to raise railway tariff plans.

Judins says parliamentary committee «is going nowhere»

The work performed by Saeima’s investigative committee in charge of oligarch case does not fit the established goal to investigate and analyse possible state capture, says member of the committee and Unity’s Saeima faction Andrejs Judins.

Study: residents criticize development of Latvia general situation the most

With the coming of autumn, residents’ optimism has declined significantly, according to results of Baltic International Bank’s Latvian Barometer.

Number of occupied jobs in Latvia up 9.3 thousand

At the end of the first half of 2017, in Latvia there were 903.2 thousand occupied posts, and, compared to the end of the first half of 2016, the number has grown by 9.3 thousand or 1.0 %.

Latkovskis says sometimes questionable votes are lobbied in Saeima in secret

There have been cases sin which questionable votes were being lobbied in the parliament in secret. Compared with last year, this tendency is demonstrating growth, said Saeima deputy Ilmārs Latkovskis in an interview to Latvijas Avīze.

E-governance advocate Ilves comments on alleged Estonian ID card vulnerability

The ex-President of Estonia Toomas Hendrik Ilves, who has been an active advocate of e-governance has emphasised that a possible security risk with Estonian ID cards has not put that the country's reputation as an e-state at risk.

Delna invites Saeima to support initiative to liquidate option to abstain from votes

Society for openness Delna invites Saeima deputies to support public initiative and liquidate the option for deputies to abstain from votes.

82% of Estonian households use mobile internet at home

As to the choice of internet connection in Estonia, 82% of Estonian households use mobile internet at home, Estonian statisticians have estimated.

Baltic Express attracts railway cargoes; decline noted for other carriers

Railway cargo carrier Baltic Express more than doubled its cargo volumes in the first seven months of 2017. Meanwhile, other two cargo carriers – LDz Cargo and Baltic Transit Service – have suffered cargo declines. Baltic Association – Transport and Logistics notes that it is ringing the alarm over the situation in the industry, not over the interests of its members.

Survey: more than half of Latvian residents are half-serious about their health

44% of Latvian residents use all medicine prescribed by their doctor when they get sick, according to data from Mana Aptieka&Apotheka health index.

In pictures: Zapad drill in full swing

BNN offers you an insight into the quadrennial join military training of Belarus and Russia, which have been inspected in person by Russian President Vladimir Putin and Russian Defence Minister Sergey Shoygu.

Most read

Most commented