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Fee for home delivery of pensions or benefits in Latvia to double next year

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From 2020 onward the fee charged by Latvian Post for home delivery of pension, benefit or remuneration paid by State Social Insurance Agency (VSAA) will be EUR 4.88, which is double of the current fee, whereas from 2021 onward this service will cost EUR 5.28, as journalists were told by VSAA director Inese Šmitiņa.

She said that Latvian Post won in the procurement of delivery services. Latvian Post was only the sole candidate.

«The contract is signed for two years – 2020 and 2021. It is important to inform people in advance, because some people may decide to opt out this option,» said Šmitiņa.

«The price of the service will be EUR 2.39 until the end of the year. Starting with 1 January 2019, however, it will increase to EUR 4.88. 2021 onward, however, it will increase even more – EUR 5.28,» she added.

According to VSAA, the number of pension, benefit and remuneration recipients in Latvia who choose to have money delivered to their home is currently rapidly declining. This has a significant effect on the service’s self-cost. For example, in 2013 pensions were delivered to the homes of 127 000 people in Latvia. In 2018 pensions were delivered to 85 000 people, whereas in the first months of 2019 pensions were delivered to 79 000 people, which is 14% of all pension recipients.

«The choice of having pension delivered home does not depend on the proximity of postal offices. Surprisingly, the majority of people who use this service are residents of Riga. There aren’t more pensioners there, it’s just that the number of pensioners who use this service is larger in the capital,» said Šmitiņa.

Only 2% of all pension recipients in countryside areas have their pensions delivered to their homes.

According to compiled data, among the people who receive different VSAA payments at home are 4 600 people aged up to 59 years, 9 600 people aged between 60 and 69, 24 800 people aged 70 to 79. The majority of the people who receive different payment at home (38 200) are 80 or older.

VSAA director stresses that she wanted to inform residents a bout changes to the fee in advance so that they are able to make an informed decision of EUR 4.88 is not too much to pay.

Šmitiņa also added that younger pensioners more often pick non-cash form of payment and transfers to their bank accounts.

Latvian Post board chairman Mārcis Vilcāns admits that demand for the aforementioned service is down.

«I can also add the fact regarding this service’s exclusivity – it takes a lot of time, because it also includes a social function. The process takes a lot of time for the postman. There is also the time it takes to process money. Transportation of money is one of the most expensive services, and costs tend to increase,» he said.

The chairman of Latvian Post also mentioned the company offers opening an account with the Postal Transaction System, which is the system that receives and processes pensions and benefits.

«We have considered an alternative to an internet bank, but once we went through profiles of our clients, we concluded that it would not be an optimal solution to invest money in development of internet banking system. One of the main reasons is that there is no way for us to compete with large banks. I would be very hard to convince bank clients to switch to our system,» said Vilcāns.

When asked why the fee will be EUR 4.88 and not exactly five euros, Vilcāns said the calculation process was very precise and nothing was rounded. «We are a socially responsible company,» said the company’s chairman.

VSAA report that in Estonia the fee for the home delivery of a pension or benefit is EUR 8.10. In Lithuania delivery of a pension using postal services is provided only to invalids and people who do not have an option to withdraw cash close to their home, as well as people older than 80 and whose contract for the delivery of pension money was signed before 2009.

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