bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Friday 28.07.2017 | Name days: Cecīlija, Cilda
LatviaLatvia

Expert: pension capital grows, but the Latvia still has a ways to go

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU«Latvia’s pension system has been named one of the best in the world multiple times. Pension capital in it has grown rapidly over the years. The volume of savings gathered on the 2nd level pension system by the end of Q1 2017 came close to EUR 3 billion. The volume saved on the 3rd level pension system was close to EUR 4 billion,» explains Nordea Pensions Latvia board member Ilja Arefjevs.

Nevertheless, he emphasizes that in spite of the impressive numbers, the picture is completely different when it comes to calculating pension savings per capita – EUR 2,287 in the 2nd level pension system and EUR 1,420 in the 3rd level pension system.

Pension savings and GDP

There are different methods to help assess the pension volume the country needs. Pension capital is very individual because it depends on personal financial situation. Still, it is relatively simple to calculate, says Arefjevs.

«According to data from OECD, pension savings in the European Union range between 90 and 100% from countries’ GDP. However, it is important to keep in mind that the EU consists of old, wealthy countries and relative newcomers. For example, pension savings reach 150% of GDP in Netherlands and 100% of GDP in the UK. In many other countries, on the other hand, this index is significantly lower,» the expert continues.

Pension savings growth potential – more than seven times

Arefjevs notes that Latvia’s GDP is EUR 25 billion. Nearing the average EU level means pension savings should reach EUR 25 billion (savings on 2nd and 3rd level pension systems were only EUR 3.3 billion in Q1 2017) at current prices. On average, this means EUR 20,000 per pension system participant. The largest portion of this amount applies to 2nd level pension system, considering the 6% rate from gross wages and the large number of participants – 1.3 million people.

Large number of small wage recipients and grey economy are at the core of disproportion

«Without a doubt – rapid development and capital formation in Latvia requires time. But the lack of time is not the only obstacle. For example, Estonia’s 2nd level pension system has around 700,000 participants. Their total volume of savings is EUR 3.3 billion. This means around EUR 4,800 per capita, which is more than twice the amount when compared with Latvia. As we all know, average wage in Estonia is not twice as large in comparison with Latvia,» says Nordea Pensions Latvia board member.

It should also be said that payments to the 2nd level pension system were higher for some time in Estonia. But the difference between 2nd level pension systems in Latvia and Estonia is present mainly because Estonia does not have such a large number of minimal wage recipients as Latvia.

The hardest part is over

«Last year’s summer was the moment when the number of 2nd level pension participants whose savings ranged between one and five thousand euros was higher than the number of clients whose pension savings were below one thousand euros. Of course, this accomplishment is purely symbolic, because pension capital under five thousand euros is not considered sufficient. Still, it can be considered a positive tendency, one that is expected to remain in the future. It should be noted that the number of clients whose 2nd level pension savings exceed five thousand euros and less than ten thousand euros continues growing rapidly. There are now more than one hundred thousand such clients,» says the expert.

Ref: 224.109.109.6093


Leave a reply

Juncker to held stop food discrimination of EU's eastern members

Reacting to criticism from Slovakia, Bulgaria and other European Union member states on differences in food product quality in Eastern Europe, the head of the EU's executive body, Jean-Claude Juncker, has pledged to help end the «totally unacceptable» practice.

Property purchase and rent trends are similar among Baltic States

Currently the proportion of standard apartments in Riga in comparison with new projects is rather significant – while the number of standard apartments in the capital is 3,200, new projects are limited to only 300 buildings, according to information compiled DNB Bank and Ober-Haus on apartment demand in Latvia and Baltics.

Construction costs in Latvia up 0.2%

Compared to May, the level of construction costs in Latvia increased by 0.2 % in June 2017.

Beer brewers: many will lose jobs because of increased excise tax on beer

If the Saeima supports the initiative on increasing excise tax on beer by 50% this Thursday, 27 July, the number of people employed in the beer industry will decrease 30%, which will especially impact residents of Latvia’s regions, according to Latvian Breweries Union.

Helsinki-Riga route to be tested by Tallink

Estonian ferry and cruise company Tallink is testing this week the interest of passengers to take a cruise trip from Helsinki to Riga.

Where is the piece of land Duklavs’ associates wanted 15 million for?

Ir magazine has surveyed several hectares of land on Daugava River’s left bank, specifically within the territory of Riga Freeport, to find the piece of land that was mentioned by Agriculture Minister Janis Duklavs during his conversation with other politicians in Ridzene hotel.

Opinion: candidates of the last presidency have all been intellectually weak

One of this summer’s hottest and most discussed piece of news was the proposal to allow residents to elect the country’s president. Latvian President Raimonds Vejonis’ 22 June speech to the parliament, in which he proposed allowing the people to elect the president in 2019, caused even more discussions.

Flat rental fraud increases in Estonia

Police in Estonia have observed a increase in fraud complaints in the area of rental flats as fraudsters typically ask for prepayments and deposits for listed flats they do not own.

Latvian troops to participate in Northern Strike exercises in USA

Throughout 27 July – 14 August, more than 70 troops of Latvian Armed Forces will be taking part in Northern Strike 2017 joint land and air exercises organized by Michigan National Guard in USA.

Delna: if the prime minister chooses to stifle emotions, the president should step up

On Wednesday, 26 July, Delna received a response letter from Prime Minister Maris Kucinskis to Delna’s previous letter, in which the organization requested the dismissal of Agriculture Minister Janis Duklavs.

Saeima supports tax reform laws in final reading

Saeima’s Budget and Finance Committee has concluded work on tax reform laws, supporting them in the final reading. Part of the proposals on additional benefits and multiple other matters will be put off for a later date.

Latvian Shipping Company sells its office building on Elizabetes Street 1

On Tuesday, 25 July, Latvian Shipping Company signed an agreement on the sale of its current office building. The buyer and the next owner of the house will be the United Arab Emirates, who purchased the six-story building on Elizabetes Street 1 in Riga for the needs of the embassy, as confirmed by the company.

Farmers Saeima: beef industry in Latvia is not sufficiently developed

Farmers Saeima believes Latvia’s beef industry is not sufficiently developed, and existing farms have not sufficiently stabilized – many farms have major debt. Because of that any kind of support for the industry is welcome.

Puce: Latvia should ratify Istanbul Convention without reservations

For Latvia’s Development political party has turned to Welfare Ministry with a request to ratify Istanbul Convention without any corrections as soon as possible, BNN was informed by the party’s representatives.

More than half of Latvian businessmen work on weekend; study shows

Businessmen normally spend eight hours and five minutes on work every day. More than 58% of Latvian businessmen also work on weekends, according to data from the latest Citadele Index study.

Farmers: crop yield this year will be positive thanks to weather

In Zemgale, crop harvest began a week ago. Harvest of winter crops is almost over. Harvests elsewhere in Latvia will commence no sooner than August, farmers say.

Murniece offers UGF to consider replacing Duklavs

«The policy is that, considering Duklavs’ involvement in Ridzene talks, the Union of Greens and Farmers should consider ways of resolving the situation,» says Saeima speaker Inara Murniece.

Chinese-Russian navy drill takes place in Baltic Sea

Russian and Chinese navies have launched their first joint military drill in the Baltic Sea raising concern to NATO member states Estonia, Latvia, Lithuania and Poland, cautious of Russia's aggressive actions in Ukraine.

Tax loss forecast by Estonian food producers dismissed by Finance Minister

Estonian Finance Minister Toomas Tõniste has rejected the grim forecast published by the Estonian Food Industry Association this week that the state budget would lose 170 million euros in tax revenue in 2018 due to excise tax hikes.

Antane: excise tax for diesel fuel should be reduced, not increased

«Unfortunately, when making the decision to increase excise tax rate for diesel fuel, the government did not consider all possible risks this decision could bring to the transport and logistics industry and the country’s economy as a whole,» BNN was told by President of Baltic Association – Transport and Logistics Inga Antane.

Association: rapid increase of excise tax would cause dramatic rise of smuggling activity

National Association for Tobacco Product Manufacturers is confused about Finance Ministry’s submitted proposals for tax reform that provide for raising excise tax on cigarettes by 11% instead of previously planned 5.5%.

UK plans to ban petrol and diesel vehicles

In an attempt to curb air pollution the UK plans to set the goal to ban from 2040 new diesel and petrol engine cars and vans.

Members of Saeima delegated to the investigative committee in charge of Oligarch case

Andrejs Judins from Unity, Martins Sics from Latvian Association of Regions, Igors Pimetovs from Harmnony, Ritvars Jansons from VL-TB/LNNK, Inguna Sudraba from To Latvia from the Heart and Ainars Mezulis from the Union of Greens and Farmers have been delegated to the parliamentary committee for the investigation of Oligarch case.

U.S. legislators back additional sanctions on Russia

The House of Representatives of the U.S. Congress has adopted imposing additional sanctions on Russia, North Korea and Iran, even though U.S. President Donald Trump has opposed fresh sanctions on Russia.

Government allows Bite Lietuva to become the owner of TV3, LNT and Star FM

On Tuesday, 25 July, the Cabinet of Ministers permitted Lithuanian company UAB BITE Lietuva to acquire decisive influence in Latvian media companies TV 3 Latvia, LNT and Star FM.