Wednesday , June 16 2021

Pension indexing takes place in October; what pensions are getting bigger? – in Latvia



The Ministry of Welfare states that on October 1, 2019, pensions and benefits are indexed and pensions or benefits or parts thereof not exceeding EUR 420 are increased.

This means that the full amount of the pension and the benefit are indexed if it does not exceed 420 euros. On the other hand, for pensions and benefits over € 420, part of the amount allocated – the already mentioned € 420 – is indexed. The increase depends on both the pension amount and the remuneration and the index to be used. The exception is politically oppressed people with disabilities in Group I and those involved in eliminating the aftermath of the Chernobyl nuclear power plant indexed for their full retirement.

Welfare Minister Ramona Petraviča: “This will be the largest pension index in recent years provided by the development of the Latvian economy. More importantly, those with the most seniority will be appreciated. Every small increase in retirement is a support to our seniors in improving their quality of life. I hope that support for the elderly will only increase next year, even if the minimum pension level is raised. That is my priority for next year. "

The purpose of indexing pensions is to ensure that pensions and benefits provided are protected against loss of purchasing power and that their value is not lost.

This year, the index for pensions, disability, survivors' pension and claims is 1.0719.

As before, different indices are used for the indexation of old-age pension, depending on the person's accumulated insurance record. The longer the insurance period, the higher the index is used and the larger the retirement pension one can expect.

If the insurance protocol is up to 29 years, the indexation of pensions will take into account, in addition to the actual consumer price index, 50% of the real increase in insurance contribution wages for 30 to 39 years, and pensions for work that is harmful and 60% in cases of dangerous and extremely difficult working conditions, 70% for 40 to 44 year olds and 80% for 45 years and over

Thus, for persons up to 29 years of insurance, the index for retirement will be 1,0719; if the insurance record is between 30 and 39 years, the index is used 1.0805; If the insurance period is between 40 and 44 years, the index will be 1.0891. If the insurance period is 45 years and over, the index will be 1.0977.

For example, if the retirement pension is € 350, then for a senior with up to 29 years this year. October pension of € 375.17 (€ 25.17) for periods from 30 to 39 years – € 378.18 (€ 28.18) for periods of 40 to 44 years – the pension is € 381.19 (€ 31, 19 higher). Conversely, if the insurance record is 45 years or more, the pension will increase to € 384.20 (€ 34.20 higher).

October also, for the first time in October, indexes the age and invalidity allowances granted for one-year insurance, accrued until December 31, 1995, using an index of actual consumer prices plus 50% of the real increase in insurance premium pay. For the purpose of indexing the premium, the relevant index is applied on 1 October 2019 to premiums of approx. EUR 1.00 for each insurance year until 31 December 1995 and premiums of approx. EUR 1.50 for each insurance year until 31 December 1995, if the old-age pension was awarded before 31 December 1996 or the invalidity pension was awarded and the age at which the old-age pension became due was reached before 31 December 1996

This means that the current premium, currently € 1 and € 1.50 per. Insurance year, will be revised using the index 1.0719. As a result, people who received € 1 for each year of service accumulated before the end of 1995 receive € 1.07 in the future, while those who received € 1.50 receive € 1.61.

Eg. A pensioner receiving a retirement pension of € 400 for a total insurance period of 45 years plus a supplement of € 25 (for 25 years of service (over 45 years) until the end of 1995). October receives an old-age pension of € 439.08 and a pension supplement of € 26.75.

It should be noted that personal income tax can be deducted from the total pension amount and allowance, which reduces the amount payable.

Old-age, invalidity, old-age and survivors' pensions and allowances granted or recalculated before 30 September 2019 are indexed.

According to preliminary estimates, 41.6 million litas will be used this year to index pensions and benefits. and by 2020 it will be around 166 million. EUR. Euro.


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