As the average wage in Lithuania grows, the average old-age pension is also gradually growing, but the gap between them is still very large. Loreta Načajienė, head of Luminor investment management, explains why the growth of pensions is still slower.
Last year, the average salary (net), including individual companies, amounted to about 1,240 euros, and the average pension was 539 euros, according to the data of the State Data Agency. This means that the pension accounts for approximately 43 percent. average salary.
“But not so long ago, the situation was different – for example, in 2011, the pension accounted for 51 percent of amount of salary. Then, from 2011 to 2020, we observed a trending decrease in the ratio of average wages to pension amounts, with a small temporary jump in 2018-2020, when the ratio of pension to salary reached its lowest level and amounted to just over 41 percent. average salary”, the expert points out.
From 2021, the situation began to slowly but steadily improve and the ratio between pensions and wages increased to 43 percent, says the expert. Therefore, although the growth rates of the average wage and the average pension are not yet equal, the situation is relatively improving.
In part, the reason for the increase in pensions is in 2018. Pension indexation was introduced in Lithuania, which linked the increase of state pensions to the growth of the average wage in the country, and in 2020 an additional indexation factor was introduced, the purpose of which is to ensure that pensions grow faster than wages.
However, this may not be enough to ensure a financially secure old age.
“The state of Lithuania is getting richer – over the last 10 years, the average wage has increased by as much as 136.5 percent. But at the same time, our society is aging. In the future, the number of pensioners will increase, while the number of people of working age will decrease, so it will be increasingly difficult for the state to support the growing number of pensioners from the taxes paid by working people. This means that it is possible that the state pension of “Sodra” alone may not ensure the desired livelihood in old age,” emphasizes L. Načajienė.
According to the expert, in order to live comfortably after retirement, it is recommended to get at least 70-80 percent. a pension based on current monthly income. For example, Danes and residents of many other countries secure a pension of this size by saving on their own or together with their employers. Possibilities to do this are also created in the second and third tiers of pension accumulation operating in Lithuania.
“Those individuals who save in the second tier can expect to receive around 50% in retirement. a pension aiming for the former income, and if they accumulate in the third one, then 70-80 percent can be predicted for them. a pension equal to the former salary. This is as much as personal finance specialists recommend,” says the head of Luminor investment management.
About UAB “Luminor investment management”
According to the data of the Bank of Lithuania, in 2023 (inclusive) according to the managed assets of second-tier pension funds, “Luminor investment management” occupied 7 percent. market share, including life insurance companies, as well as managing second-tier pension funds. The company had 27.5% of the managed assets of the third-tier pension fund. of the market share of third-tier pension funds.
Press release
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– 2024-04-23 21:14:53
