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Government supports increasing retirement age in 2014

Mar 27, 2012

Government supports increasing retirement age in 2014

RIGA – Today, Latvian government approved amendments to the Law on Pensions, stipulating that the current retirement age of 62 will be gradually increased already in 2014, even though it was initially planned that it will be done in 2016.

According to the plan, retirement age will be increased by three months on January 1 of 2014 and 2015, and starting from 2016 by six months every year, until reaching 65 in 2020, LETA was informed by the Welfare Ministry's representative Marika Kupce.

The reform will concern residents born in 1952-1957, about 50,000 people altogether. Those residents, who were born from January 1 to September 30, 1952, will be able to retire three months later, at 62 years and three months of age, while those born from October 1 to December 31, 1952 - six months later - at 62 years and six months of age. Those born after July 1, 1995, will be eligible to receive pensions at the age of 65.

Early retirement age will also be increased, according to the same schedule, to 63 in 2020.

The minimum insurance record will be raised from 10 to 15 years starting from 2014 and to 20 years starting from 2020.

Also, payments supplementing old-age and disability pensions will be paid from the master budget, not welfare budget, starting from 2014.

The amendments must still be passed in Saeima.

The previous amendments to the Law on Pensions stipulated that the retirement age would be gradually increased from 2016. Now, however, it has been envisaged that the retirement age will be gradually increased already from 2014, taking into account the negative welfare budget trends and the latest population census data.

Opposition parties Greens/Farmers and Harmony Center have already announced that they will not support increasing the retirement age, and, if the amendments are passed in Saeima, will urge President Andris Berzins not to promulgate them.

The Latvian Free Trade Unions' Association (LBAS) also disapproves of raising the retirement age. LBAS Deputy Chairman Egils Baldzens emphasized during the government's session today that the association will maintain its stance also in the parliament. LBAS believes that the government has not made use of all opportunities for additional social budget revenue. For example, by reducing the share of shadow economy in Latvia to the average level in the Baltic states - 20 percent, the state budget would have access to additional 470 million lats.

The Latvian Employers' Confederation believes that certain adjustments are needed in the pension system, however, objects to the government's plans to increase the minimum insurance record to 20 years.

Prime Minister Valdis Dombrovskis (Unity) reminded during the session that early retirement regulations, which cost additional 20 million lats to the state budget, were added to the law due to trade union pressure.

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