For information on the total accrued capital at the second level, including the contributions transferred, and for transactions at the second level, the Latvija.lv e-service “Pension Level 2 Participant's Account Statement” may be used.

There is an opportunity to change the fund manager or investment plan. This can be done by using the E-Application for the Choice or Change of Pension Level 2 Investment Plan. The manager of funds may be changed once in a calendar year, but the investment plans managed by the fund manager may be changed twice in a calendar year.

When applying for an old-age pension, the capital accumulated at the second level can be used by adding to the pension capital accumulated at the first level or by purchasing a life-insurance (life-saving pension) policy.

More information on the use of capital accumulated at the second level can be found in the description available on the website of the VSAA.

Second-level election

A second-tier member who has not yet claimed an old-age pension may choose how the capital accumulated at his second level will be used in case he dies before the old-age pension is awarded:

• to transfer the State pension into the special budget;
• add another person's pension to Tier 2 capital;
• inherit in accordance with the procedures specified in the Civil Law.

It is necessary to notify the State Social Insurance Agency (VSAA) of its choice by submitting an application. This can be done by:

• on the Latvija.lv portal, using the “E-provision for VSAA services” e-service and selecting an appropriate form of application (in this case, “E-Application for the selection of a member of pension level 2 for the succession of accrued capital”) and filling it in;
• sending an application signed with a secure electronic signature to the VSAA e-address;
• in-presence in the VSAA or in the single customer service centres of the State and Local Governments;
• sending an application signed with a secure electronic signature to the pasts@vsaa.gov.lv.

If the person has not announced the choice before death, the accumulated capital will be credited to the special budget of the State pension.

To find out what the choice of the deceased has been, can be addressed personally VSAA in Customer Service Centers or by a sworn notary, at the beginning of the proceedings of inheritance.

The amount of capital accumulated at the second level can be identified as:

• using the Latvija.lv e-service “Pension Level 2 Participant Account Statement”;
• on-site, at any VSAA customer service center.

Read more information on the VSAA website. 

At the third level of the pension system, it is possible to voluntarily create additional provisions for their pension. This means that, in addition to the first and second levels of the pension system, you can voluntarily invest part of your income in one of the private pension funds or accrued insurance.

Private pension funds or insurers are investing in cash, with a view not only to maintaining but also to increasing the value of stocks over the long term. In long-term savings instruments offered by life insurers, a pension provision may be made up of a fixed yield percentage, or form a retirement provision by linking it to investment funds.

The accruals created over time will serve you as a supplement to the pension guaranteed by the State. Read more information in law on private pension funds.

Payment of contributions at pension level 3

• Contributions to pension level 3 may be made from the age of 18.
• At pension level 3, you can make contributions yourself, your employer, another natural person for your benefit, if you have a contract with a pension fund, insurer.
• The amount and regularity of the contributions, as well as the potential provision, depend on the pension fund selected, the insurer and the pension plan. More than private pension funds.

Custodian banks, or banks holding the assets of the fund shall keep their accounts and transactions with the funds of the fund, the funds of the pension contribution shall be kept separately from their assets. Therefore, the money invested cannot be lost, even if the custodian bank failed, or manager of funds. Read more about joining the 3rd Retirement Level here.

Receiving a pension level 3 provision

Private pension funds or accrued insurance may benefit from the age of 55, but it is possible to continue to build the provision beyond the age of 55 until the time it is desirable.

It can also be obtained more quickly, in cases where:

• In the case of a member working in a profession designated faster retirement age
• If a member has been identified for Group 1 disability (forever)
• In the event of the death of a member, the designated persons (beneficiaries) or heirs, if there are no designated persons.

In order to receive a pension accrued at Tier 3, an application for the receipt of accrued pension capital must be submitted to his or her pension fund or to the insurer. The provision may be received in instalments, periodically or in one amount.

The money accumulated at level 3 of pensions may be inherited by the person specified in your contract or by the heirs in accordance with the procedures specified in the Civil Law (also under the age of 55).

Tax incentives for contributions to pension level 3

You are entitled to the Overpaid Income Tax (IIT) for contributions to your pension level 3, which does not exceed 10% of your calendar year's gross income (maximum annual contribution of EUR 4000). If your employer also makes contributions to your private retirement provision, each may receive tax incentives for its share of contributions.

You will receive the overpaid IIT if you have submitted it to the State Revenue Service (SRS) annual income statement which states the contributions made at Tier 3 of pensions, even if they have been made by your spouse. The pension fund electronically sends information to the SRS regarding the contributions made to the pension level 3 in the previous year, therefore it is not necessary to submit documents certifying payments to the SRS.

For citizens who already have entitlement to an accrual, and who benefit from tax incentives, it should be noted that contributions made during the calendar year to the pension fund must be held for at least 2 years. So, in a given year, if you have received a tax rebate, you will only be able to withdraw it for two years after that. Read more in the Law On personal income tax”.

More on Pension Level 3, read www.manapensija.lv. 

A common body has been developed in the European Union (EU) social security regulation– Regulation 883/2004 on the coordination of social security systems (hereinafter referred to as the Regulation), but in each country the pension must be earned under its own law. The pension scheme of each country can be consulted On the European Commission's website. If you want to go to another Member State or temporarily work there, you do not lose your contributions and rights to social services in Latvia. It is also possible to receive two pensions at the same time, subject to national legal provisions.

Basic principles of the Regulation:

• each State grants a pension for its periods of insurance;
• the person is subject to the legislation of only one country in order to avoid overlapping of two or more national insurance periods;
• the determination of pension rights may take into account the periods of insurance approved by the competent authority of another Member State of the European Union and of the European Economic Area (EU/EEA).

If you are legally employed in one of the EU/EEA Member States, you are entitled to participate in that country's social security system.

Each Member State shall have its own rules of law applicable to the establishment of pension rights, such as the rates of contribution, the retirement age, the length of insurance required, and other conditions. The retirement age in the EU/EEA Member States can be viewed on the VSAA website.

More information on the procedures for calculating pensions as well as on the procedures for submitting pension claims and the costs to persons living in EU/EEA Member States can be read on the VSAA website.

The Republic of Latvia has bilateral cross-border agreements on social security cooperation in order to maintain a pension for periods of work in the country concerned while working in another country and to allow free work elsewhere, thereby contributing to the economic activity of the population, as well as eliminating the right to overlapping pensions and social vulnerability in the event of different conditions. Such agreements on social security cooperation have been concluded with Russia, Ukraine, Belarus, Canada, Australia and Guernsey. There is also a contract with the US on mutual pension costs, which provides more limited rights than social security cooperation agreements.

Information on the application of trans-national contracts can be read on the website of the VSAA.

Annual income declaration

If you are a resident of Latvia (domestic tax payer) and have earned income in foreign countries in the tax year (calendar year), you must be in the State Revenue Service (SRS) in the following year from 1 March to 1 June (taxable income per year from EUR 62 800 – from April 1 to July 1). the annual income statement shall be submitted.