Lithuania needs to reform its pension system – head of IMF mission

VILNIUS – Lithuania needs a structural reform of its pension system as its population continues to age, Borja Gracia, the head of an IMF mission, says.

"There needs to be a pension reform, a parametric (systemic – BNS) pension reform. Your pension system is benefiting from better than expected dynamics in the labor market, higher labor participation, higher employment in the short term, high wage growth," he told a seminar held by the IMF mission and the central Bank of Lithuania in Vilnius. "But aging is kicking and kicking quite significantly."

2024 is the first year when more people will retire in Lithuania than will enter the labor market, Gracia said, adding that the planned increase in the retirement age will end in 2026, which will further "increase pressure on the SoDra (Lithuania's social insurance fund – BNS)". 

By 2030, he said, the number of workers in Lithuania will fall from 1.8 million to 1.3 million and they will have to pay a large share of pensions, which will require a redistribution of the state budget.

The IMF mission chief also says that Lithuania needs to make its health and education systems more effective, as well as to increase budget revenue collection.

The Gracia-led IMF mission will work in Vilnius until June 7.