Social budget short of cash

RIGA - Almost all, or 95.5 percent, of able-bodied Latvian residents, ages 25 to 45, do not believe that the Latvian state will be able to ensure sufficient retirement pensions, according to a study carried out by the market and public opinion research center SKDS in cooperation with Citadele Bank, reports Nozare.lv. Almost 77 percent of respondents were convinced that the state will not be able to provide sufficient pensions. 18.7 percent doubted the state’s capability of doing so.
Only 0.5 percent of respondents strongly believed that the state will be able to ensure sufficient pensions. 1.8 percent were inclined to believe, whilst 2.2 percent had no opinion.

SKDS Director Arnis Kaktins said that the results are shocking and show that the populace does not trust the government or the state. Citadele Open Pension Fund Chairman of the Board Ugis Vorons pointed out that people’s lack of trust can be explained by the events that happened during the last two years – a reduced contribution percentage for second pillar pensions and previously planned budget cuts. The Constitutional Court, however, ruled that retirement pension cuts were unconstitutional.

Vorons believes that the state and the pensions system have lost people’s trust due to the government’s inconsistent actions.
According to previous studies, most residents believe that 500 - 600 lats (714 – 857 euros) per month would be a sufficient amount of money. However, in order to “fulfill their dreams,” they would need 1,200 lats per month.
Not everyone has the luxury to worry about their retirement living. The number of needy residents in Riga last year increased 53 percent, and the social budget grew 44 percent. Social benefit spending reached 17,950,000 lats, according to the Riga City Council Welfare Department. 71,951 people received social benefits in 2010. The number of people with a low income increased six percent per month. 28,899 needy residents were registered in 2009, whilst this number was 44,275 in 2010.
Guaranteed minimum income spending and apartment allowances totaled 13,524,000 lats.

Due to the increasing number of people with low income, Riga Mayor Nils Usakovs (Harmony Center) previously admitted that Riga City Council will most likely have to seek an additional 2 million lats in funding for social benefits.
Usakovs was concerned that the social budget will run out of funds already in May. In that case the municipality will have to come up with an additional 1 million lats so that residents of Riga would be able to receive their benefits. An additional 1 million lats might still be required in September.