bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Saturday 25.11.2017 | Name days: Kadrija, Kate, Katrīna, Trīne

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

Saeima member proposes finally arresting Aivars Lembergs

During debates regarding proposals for the next year’s budget, Saeima member Artuss Kaimiņš from KPV LV political party suggested finally putting Mayor of Ventspils Aivars Lembergs, who is accused of serious crimes and is currently suspended from his many posts.

Svarenieks: there could be a deficit of certain vegetables in spring

Cold and damp weather that has negatively affected the vegetable harvest in Latvia, will also affect the vegetable processing sector in spring because of a deficit of certain vegetables, says vegetable and fruit processing company Kronis board member Aivars Svarenieks.

Social protection expenditure in Latvia up 4.2%

In 2016, social protection expenditure in Latvia accounted for EUR 3.7 million and, compared to 2015, it has grown by EUR 151 million or 4.2 %.

Latvian parties took part in sports games organized by scandalous Russian politician

On Lāčplēsis Day, 11 November, certain members of the Saeima from Harmony party and Union of Greens and Farmers participated in sports games organized by Jaunā līga association supported by the Russian parliament. The initiator of those games is Dmitry Svistsev, a member of the Russian Liberal Democratic Party led by scandalous Russian State Duma politician Vladimir Zhirinovsky, Latvijas Avīze writes.

Famous Lithuanian film director suffers backlash amid sexual misconduct accusations

Although the list of powerful Lithuanian men accused of sexual misconduct is nowhere to match the similar compilation in the United States, where many women have busted an army of entertainment industry big-names, politicians and other public life celebs, however, the wave of woman revelations of men’s unwanted sexual advancement has reached Lithuania, too.

LEC: it is important to ensure efficient investing of state budget finances

It is important that the state budget for 2018 helps reach goals detailed in the National Development Plan, not look for excuses why something was not achieved, says Latvian Employers’ Confederation.

Latvian barometer: Zemgale’s residents are the proudest of living in Latvia

With Latvia’s centenary coming up, Baltic International Bank organized Latvian barometer to determine Latvian residents’ opinions on festivities associated with this event, as well as Latvia’s accomplishments and factors the country should improve.

Ašeradens: the state budget should contribute to changes in national economy

The state budget should contribute to changes in Latvia’s national economy. This is why it is necessary to ensure that Economy Ministry recognizes efforts to increase productivity of the national economy, export growth, attraction of investments, innovations and business environment development as priorities in the process for the formation of the next three-year state budget, says Economy Minister Arvils Ašeradens.

Belgian waffle factory fire closes schools in Brussels

A large fire has destroyed a waffle factory in Brussels, making a cloud of black smoke over a part of the European Union's unofficial capital.

Facebook to inform users, who liked secretly Russian-made political pages

The popular social network has undertaken in the U.S. to notify its users if they have given a thumb-up to Facebook pages, which around the time of the last U.S. presidential election have been set up by foreign actors with the aim of spreading propaganda.

Officials: a safe Europe is important for Latvia

Latvia is interested in a safe and strong Europe. Security is one of the most important priorities. Looking at modern-day challenges and technological development, cyber-security’s role only keeps increasing, said chairperson of Saeima’s European Affairs Committee Lolita Čigāne after a meeting.

Weather to remain volatile in Latvia; air temperature to drop again next week

No major changes are expected for weather in Latvia in the coming days. Friday, 24 November, will be cloudy and rainy. Air temperature will range within +2° C… +7° C, as reported by State Environment, Geology and Meteorology Centre.

Pūce: RS is fortunate that «good uncle» Ušakovs gives as much money as needed

«Rīgas satiksme is a jar with an empty bottom in which Riga’s taxpayer money is put in from one end and the money put in it falls out of the other end and is used in different fraud schemes like nano-water, and the useless hydrogen-powered transport project – enormous and financially unreasonable projects....

Saeima approves next year’s budget; more funding for health and defence

On Thursday, 23 November, the Saeima approved Latvia’s budget for 2018. Next year’s budget revenue is planned at EUR 8.75 billion, whereas expenditures are planned at EUR 8.95 billion. The largest increase of funding is planned for healthcare. Latvia’s defence budget is set to reach 2% of GDP

Ķuzis: 94% of sex crimes against children are committed by people they know

Approximately half of sex crimes committed against minors take place on the internet, said Chief of State Police Ints Ķuzis at a press-conference on protection of children against sexual violence.

European Parliament approves use of EU Solidarity Fund’s advance payments

European Parliament’s Budget Committee has approved MEP Inese Vaidere’s submitted report on the use of advance payments from the EU Solidarity Fund in 2018, as reported by European People’s Party group Latvian press and communication advisor Ģirts Salmgriezis.

Authorities unmask illegal trade of products made from protected animals

Nature Protection Office and State Police have stepped up their efforts to increase control over trade of products made from endangered and protected species in the past month. Authorities have already confiscated different goods made from animals protected in Latvia and the world.

Swedbank survey: youngsters want stability; belief in Latvian labour market grows

Stability and income predictability are two of the most important values for Latvian youngsters when planning their future jobs. According to a survey performed by Swedbank, 53% of youngsters would gladly start working in an existing company.

Myanmar and Bangladesh to sigh refugee return agreement

In South-Eastern Asia, Myanmar plans to sign an agreement with neighbouring Bangladesh on the return of hundreds of thousands of Rohingya refugees, who have fled to the latter, while rights organisations point to atrocities committed by Myanmar's military.

Polish shipbuilder accused of bribing Port of Tallinn management

A senior executive of Remontowa Shipbuilding, a Polish shipbuilding company, is facing accusations of handing large bribes to former senior figures Port of Tallinn, the Estonian state-owned port operator.

Lībiņa-Egnere may be appointed head of Saeima’s National Security Committee

Unity member Inese Lībiņa-Egnere may be appointed as the new head of Saeima’s National Security Committee, as reported by Latvijas Avīze.

Expert: real estate transaction volume this year may reach 100 million euros

The volume of commercial real estate transactions in Baltic States may exceed EUR 1 billion. Latvia, meanwhile, remains behind its neighbouring countries because the volume of transactions in the country may reach EUR 100 million, says CEO of Colliers International Deniss Kairāns.

Finnish medication prescriptions to be valid in Estonia

In Estonia, Finland's digital prescriptions of medications will be valid from summer 2018 and vice versa – from around mid-2019.

Talks commence on restoring ferry traffic between Ventspils and Saaremaa

On Wednesday, 22 November, a delegation from Saaremaa municipality arrived at Vetnspils Freeport to discuss with representatives of Ventspils municipality and freeport the proposal to restore ferry traffic between Saaremaa and Ventspils.

Family of killed Maltese journalist take police to court

The family of the killed Maltese journalist Daphne Caruana Galizia has sued police believing that it does not perform an impartial investigation.

Most read

Most commented

Newest comments