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Wednesday 20.06.2018 | Name days: Rasa, Rasma, Maira

Survey: majority of inhabitants wish pension funds could be inherited

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80% of the Latvian population support the proposal to inherit accrued money in the 2nd Tier pension scheme. At the same time, 82% of the inhabitants of Latvia do not support the plan to raise retirement age from 62 to 65 years, indicates the survey conducted by Snapshot.

The survey also demonstrates a relatively low confidence in the pension system. Only about a third of the population or 32% consider the accrued funds in the 2nd Tier to be their own money.

«The survey data show that inhabitants’ confidence in the social insurance system is low. The retirement age increase in Latvia is an inevitable process, which is linked to the rapid ageing of society, increasing emigration indicators and government’s ill-advised adjustments to the social insurance system,» points the economist Edgars Volskis (Voļskis).

He notes that the continuous adjustments of 2nd Tier pension scheme conditions, in order to achieve government’s short-term fiscal objectives, not only undermine the long-term stability of pension system, but increases society’s mistrust in the social insurance system as a whole; thus, people lose motivation to make social insurance contributions in accordance with the procedure laid down by the legislation.

«Consequently, from the workers’ point of view the 2nd Tier funded capital is not linked with provisions for the expected pension amount in the future. The possibility to receive full pension through state support after retiring is also questioned. Therefore, one of the solutions would be the opportunity to inherit the 2nd Tier pension capital,» suggests Volskis.

To his mind, this would slightly build the inhabitants’ trust and motivate them to fairly pay taxes. «This is a homework that needs to be done before the budget approval, because from the economic point of view promises about the compensation of 2nd Tier pension scheme contributions in the future are dubious. The Latvian population survey data clearly indicates that such steps would even partly strengthen the society’s faith in theLatvian social insurance system,» the economist asserts.

The plan to raise the pension age from 62 to 65 years is not supported by women and men in Latvia – 84% and 80%, respectively. Only 9% of the respondents positively regard the plan to gradually increase retirement age. While 9% of the surveyed did not have a particular opinion on this issue or were not aware of such plan.

Assessing the data in terms of demographic aspect, it is concluded that negative attitude towards the retirement age raise tends to increase with the age and retirement time approaching. In the age group from 40 to 74 years such plans are not supported by nearly 90% of the residents. Highly negative attitude towards increasing the retirement age was for Russian or other nationalities representatives – 91% of the surveyed in this group rebuffs the retirement age increase.

Furthermore, only 7% of Latvia’s population regards the accrued money in the 2nd Tier pension scheme as theirs, regularly keeping track of changes to the volume of accumulated funds. The inhabitants’ passivity to manage these funds can be explained with the lack of experience and skills in the financial sector, and also with disbelief that such involvement would affect the yield.

The Latvian society positively views the opportunity to inherit accrued pension funds – 80% of the respondents supported this proposal, while nearly half of the surveyed (48%) notes this would increase their motivation to pay taxes.

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  1. fred_z says:

    This could possiby provide some incentives for making pension contributions but will ut be enough?

  2. nummi says:

    This would only be fair.

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