THE UNRESOLVED ISSUES OF THE LATVIAN PENSION SYSTEM

Abstract

The global financial crisis has left a legacy of aggravated issues in the Latvian pension system. From a wide range of problems that are closely related to the overall Latvian pension system, the main focus of the present research is placed on the unresolved or inadequately dealt with topical issues of the Latvian pension system such as raising the retirement age qualification, restructuring of expenditure of the social security system, social insurance record increase , outcomes of increasing the size of social security contributions; a friendlier approach to the pensioning of parents with many children and indexation of pensions. The main and most important sources of the research were the laws of Latvian legislation – legal acts, regulations of the LR Cabinet of Ministers, etc., and various sources dealing with questions related to functioning of pension systems, their development trends and perspectives in Latvia and other developed countries. The study mainly embraces the period since 2002 till 2013. The structure of population is examined starting from 1996. Some forecasts are given for the period till the end of 2021. The outcomes of gradual transition to the retirement age from 65 years are predicted for the period till 2027. The research allowed to make the following conclusions: a rapid increase of the retirement age may cause a number of negative consequences, including social tension; restructuring of expenditure within the current social security system may help to stabilize the state pension fund; it may be recommended to increase the minimum length of social insurance period as a condition for being state pensioned, though instead of increasing the size of social security contributions, the return to the previous level may be better; the principles of calculation of the pension size for the parents of families with many children are unfriendly to said parents; minimum criteria should be established as a reference point for indexation of pensions, and said indexation should be regressively differentiated. The study is relevant to the existing Latvian pension system improvement, and may be of interest to other countries with similar problems in their pension systems. DOI: http://dx.doi.org/10.12731/2227-930X-2013-2-6