Issue description

Retirement age and provision

 

07.06.2022.

 

Happy ageing must start taking care of it from the first day of work. Regular national social security contributions and adequate seniority will allow funds to be raised to provide them. As the principle of intergenerational solidarity works in Latvia, when you work and pay contributions, you care not only about your future, but also about the pensions of Latvian old men today.

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1. How does my pension form? 1. How does my pension form?

The main factor contributing to old-age pensions is the mandatory state social insurance contributions, so it is important to follow up on whether and to what extent they are made.

 

Latvia operates a three-tier pension system:

  • Level 1 (national mandatory unfunded pension scheme), where social security contributions are accrued for your pension and paid to today's pensioners;
  • Level 2 (State funded pension scheme), which aims to increase your retirement capital and also the size of your pension by accruing part of the social contributions and investing in the financial and capital markets – securities and bank deposits;
  • Level 3 (voluntary private pension fund), which provides you with the possibility to make an additional provision for your pension on a voluntary basis, by investing part of your income in one of the private pension funds or accruing insurance.

 

Choose the most convenient way to get information about Tier 1 capital for pensions:

 

 

Choose the most convenient way to get information about participation at the 2 nd pension level:

 

 

Choose the most convenient way to get information about the expected amount of an old-age pension:

 

Useful links

Information on Old-age pension

Regarding the pension system in Latvia, read the Ministry of Welfare more on the website.

Get additional information about the Latvian pension system on the website manapensija.lv.

 

2. What are Social Security contributions? 2. What are Social Security contributions?

Mandatory State social security contributions (social security security) shall be a mandatory payment in a special budget account, which gives the right to a socially insured person to receive social insurance services.

 

The social security security rate, if the worker is insured for all types of social security, shall be 34,09%, of which:

 

  • 23,59% is paid by the employer;
  • 10.50% is paid by the worker.

 

Of the total mandatory contribution rate of 34.09%, 1% is directed towards the financing of healthcare services.

 

Since the main principle of the functioning of the pension system is that the higher mandatory national social security contributions are made today, the higher the pension will be tomorrow, it is important to follow whether the employer pays social security contributions for you.

 

Minimum mandatory national social security contributions (minimum contributions) shall be a compulsory payment for each person to be paid by the employer at least from the national minimum monthly salary. The minimum amount of contribution per quarter shall be EUR 1500 or EUR 500 per month and shall be introduced as from 1 July 2021.

 

Choose the most convenient way for yourself to make sure you are subject to mandatory national social security contributions:

 

Useful links

Learn more what it is mandatory State Social Insurance Contributions.

 

3. How do I know my insurance (seniority)?3. How do I know my insurance (seniority)?

The State Social Insurance Agency (SSIA) shall have at its disposal all data relating to the length of the personal insurance (employment) from 1996. Until then, the accumulated periods of work and the same periods must be certified by documents to you. Therefore, it is important to check the information on your length of insurance (employment) by 1996 at the disposal of the SSIA.

The total length of insurance (employment) shall be used to determine the right to a pension. The years of insurance up to 1996 can also have a significant impact on the amount of the pension, so it is important for each person to prove all the insurance periods up to 1996.

If a loophole is identified, you must go to any SSIA customer service centre with your workbook or other evidence of insurance (working time books are no longer in use at the moment, but they are needed in determining the length of insurance (employment) for persons who have worked before 1 January 1996).

 

If the work book is lost, you must turn to previous jobs or the National Archives of Latvia. If the documents are missing and the archive fails to obtain the information, it shall be possible to refer the matter to the Administrative Court with a request to establish the legal fact of seniority.

 

Important!

Documents certifying the length of insurance (employment) up to 1996:

 

  • workbook;
  • colhozler's book;
  • evidence of training relating to the period of training after the acquisition of secondary education;
  • cardability certificate;
  • the contract of employment and the document relating to its performance;
  • an archive statement;
  • a document certifying the payment of insurance contributions;
  • disability statement;
  • A document issued by the Ministry of the Interior, the Prosecutor's Office, the Archives or the Court regarding the period of political repression;
  • other documents certifying the working period or equivalent period.

 

Choose the most convenient way to verify your data on registered seniority by 1996:

 

Useful links

For advice, go to anyone SSIA Customer Service Center.

If a workbook is lost, look at previous jobs, or The National Archives of Latvia.

If it is necessary to establish the legal fact of seniority, select the nearest Department of the Administrative Court.

 

4. How does Tier 1 of the pension system form?4. How does Tier 1 of the pension system form?

Level 1 of the State pension system does not have to apply – it is the mandatory state unfunded or non-accruing pension scheme involving all citizens from the age of 15 who themselves pay or are subject to social security contributions. This level means you're saving for your retirement and taking care of today's pensioners. This means that the longer you work and the higher the social contributions you will pay, the higher you will receive in old age.

The projected pension is based on information at the disposal of the SAA on socially insured persons:

 

  • the accrued capital of Tier 1 of the pension after 1 January 1996;
  • the calculated pension capital for the length of insurance (employment) until 1996 (if any accrued).

 

Choose the most convenient way to get information about Tier 1 capital for pensions:

 

 

Choose the most convenient way to get information about the expected amount of an old-age pension:

 

5. Am I a member of Pension Level 2?5. Am I a member of Pension Level 2?

Level 2 of the pension system makes it possible to create additional provisions for the State old-age pension provided by Tier 1 of pensions. It aims to increase your pension capital and the size of your pension by accruing some of the social contributions and investing in financial and capital markets – securities and bank deposits.

 

Note that:

 

  • if you were born after 1 July 1971, you work and are at least 15 years old, then you have been added automatically to Pension Level 2. You only have to choose your investment plan and fund manager.
  • if you were born between 2 July 1951 (inclusive) and 1 July 1971 (inclusive), you have the option to voluntarily join Tier 2 of the pension system. To do this, you have to submit an application for selecting or changing your pension Tier 2 investment plan. At the same time as the choice of the fund manager and the investment plan, you will be registered as a member of the Tier 2 pension;
  • when enrolling in Tier 2 of pensions, no additional social security contributions are required. If you pay or pay national social insurance contributions, you are socially insured. That means you're in state pension insurance.

 

Choose the most convenient way to get information about the expected amount of an old-age pension:

 

 

Choose the most convenient way to get information about the expected amount of an old-age pension:

 

Useful links

Learn more about investment plans.

For more information on the use of capital accumulated at Tier 2 of pensions, see on the SSIA website the available description.

 

6. What actions can I take with my pension Tier 2 stockpile? 6. What actions can I take with my pension Tier 2 stockpile?

You can change your investment plan and manager.

 

Members of Tier 2 of pensions may change the manager of funds once in a calendar year. You can change investment plans managed by the same fund manager twice in the calendar year.

 

How can I use the capital accumulated in Tier 2 of my pensions?

When applying for an old-age pension, you have to make a choice of how to use the capital accumulated in Tier 2 of pensions. You can

 

  • add it to Tier 1 of pensions and receive it with an old-age pension;
  • enter into a life-retirement insurance contract with a licensed insurance company that offers a lifetime-retirement insurance service. You will also receive a pension by the end of your life, you will be able to set a timetable for your costs, and you will be able to leave it to the person you choose.

 

You can choose what happens to the accumulated capital.

A member of Tier 2 of pensions who has not yet claimed an old-age pension may choose how the capital accumulated at Tier 2 of his pensions will be used in the event that he dies before the old-age pension is awarded:

 

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

 

It is necessary to notify the State Social Insurance Agency (SSIA) of its choice by submitting an application. If the person has not announced his or her choice before death, the accumulated capital shall be transferred to the special budget of the State pension.

 

Choose the most convenient way to make choices about the succession of Tier 2 accumulated capital of pensions:

  • Open e-service “E-Supply to SSIA Services", when selecting "E-Application for the selection of a member of pension level 2 for the succession of accrued capital", fill it in and submit it;

 

 

Choose the most convenient way to get information about the expected amount of an old-age pension:

 

Useful links

More information on retirement level 2 reading on the SSIA website

Find out what the deceased's choice has been, you can, personally, address SSIA Customer Service Centers or sworn notary.

 

7. What is the 3 rd pillar of pensions? 7. What is the 3 rd pillar of pensions?

At Tier 3 of the pension system, it is possible to voluntarily create additional provisions for their pension. This means that, in addition to Tier 1 and 2 of the pension system, you can voluntarily invest some of your income in one of the private pension funds or accrued insurance.

The Law provides that the right to create private funds is for Latvian commercial banks, which have the right to accept deposits of natural persons, insurance companies entitled to life insurance, as well as legal persons.

Private pension funds or insurers invest money in order not only to preserve but also to increase the value of stocks over the long term. In long-term savings instruments offered by life insurers, the retirement provision can be selected with a fixed yield percentage or linked to investment funds.

Over time, the accrual will serve you as a supplement to the state's guaranteed pension.

 

Important

According to the applicable laws, you have the right to receive, by submitting the annual income statement to the SRS, the overpaid income tax from the amount you have paid into your pension level 3, which does not exceed 10% of your calendar year's gross salary.

 

How do I make contributions at the 3rd pension level?

  • You can make contributions to the 3rd Tier of your pension from 18 years of age.
  • At pension level 3, you can make contributions for yourself, your employer or another natural person for your benefit, if you have a contract with a pension fund or 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.

 

Useful links

Learn more about level 3 of pensions.

Read more information in the Law on private pension funds.

Here you can submit annual income statement.

 

8. How will I get my pension Tier 3 stockpile? 8. How will I get my pension Tier 3 stockpile?

Private pension funds or accruing insurance may receive accruals from the age of 55, but it is possible to continue to build stocks beyond the age of 55 until the desired time.

 

It can also be received more quickly:

  • where a member of the pension level 3 works in a profession for which an earlier retirement age has been determined;
  • where the invalidity of Group 1 (forever) has been determined for a member of Tier 3 of pensions;
  • in the event of the death of a member of the Tier 3 pension, 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 a person or heirs of your choice specified in the contract in accordance with the procedures specified in the Civil Law (also not reaching the age of 55 for the stockholder).

 

Useful links

For which groups of society are defined faster retirement age?

Learn more about opportunities to accrue money at pension level 3.

 

9. How do I apply for an old-age pension? 9. How do I apply for an old-age pension?

An old-age pension may be requested by submitting an application to the SSIA. This can be done electronically on the Latvija.lv portal, on-site at the SSIA customer service centres or via the EU/EES or the competent authority of the Member States if you live in another country.

 

Choose the most convenient way to apply for your retirement:

  • open e-service “E-Supply to SSIA Services", when selecting “E-provision for the granting of an old-age pension”, complete it and submit it;

 

10. How can I get a pension earned in the countries of the European Economic Area? 10. How can I get a pension earned in the countries of the European Economic Area?

There are regulations in the European Union (EU) which lay down common rules for the protection of social security rights, but in each country the pension must be earned by its law. If you want to go to another Member State or work there temporarily, the contributions made in Latvia remain in Latvia and are taken into account if the right to a pension in Latvia arises. It is also possible to receive two pensions at the same time, subject to national legal requirements.

 

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 insurance periods approved by the competent authority of another Member State of the European Union and of the European Economic Area (EU/EEA);
  • if you are a resident of Latvia (domestic tax payer) and have earned income abroad in the tax year (calendar year), you must submit to 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). annual income statement.

 

Useful links

European Union social security regulation.

You can look at the retirement age in the EU/EEA Member States on the SSIA website.

More information on the procedures for calculating pensions as well as on the procedures for submitting a pension claim and on the costs to persons living in EU/EEA Member States can be read single Digital Gateway portal “Your Europe”.

For information on the application of trans-national contracts, please read on the SSIA website.

For more information on the annual income statement and its submission, read on the SRS website.