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Emigrate if you can: Future pensioners in Lithuania are promised a bleak outlook, as the state will not provide even a third of their former income

Prices in Lithuania are exorbitant, salaries are low. It is not possible to save for old age. Pensions in Lithuania are a mockery. Sooner or later, we will all reach that retirement age.

 

     "The young people of our country who are currently entering the labor market, when they reach old age, can expect that the state pension will not make up even a third of their income, according to a new study by the Agency for Economic Cooperation and Development (OECD). Experts say that the assumptions of this study are open to criticism, but this does not change the fact that Lithuania should be more concerned about the welfare of future pensioners.

 

     The recently published OECD report states that the current 22-year-olds, who are just now entering the labor market, will receive a pension from the Lithuanian state when they reach old age, which will amount to only 28.9 percent of their former income. This is the lowest rate among the 39 countries examined in the study.

 

     According to the OECD, Portugal will be the most generous to its pensioners in four decades, with a state pension of 98.8% former income. 90 percent pensions should exceed the former income limit in Turkey, the Netherlands and Greece.

 

     The average of this indicator in OECD countries is twice as high as in Lithuania - 61.4 percent.

 

     The OECD calculations compare pensions with expected average wages, and also assume that the laws defining the size and calculation procedure of pensions in the states will remain as they are now.

    

     Experts interviewed by Delfi say that the OECD's assumptions are not necessarily correct, so the reality may be quite different. On the other hand, it is obvious that we have a programmed problem in the current pension system of our country.

 

     Attitude is also to blame

 

     Vilnius University professor Romas Lazutka, who shared the OECD data on Facebook, says that the small future state pensions in our country are also programmed in the Lithuanian attitude towards the pensioners themselves, which needs to be changed.

 

     "We don't consider an old person to be still a person. Here is the legacy of an agrarian society, when it seems that a person has raised children and he can no longer want anything, he has to settle for a poor existence. This has been the case throughout the period of Independence", says R. Lazutka.

 

     According to him, an illustration of such an attitude can be seen by looking at customers of cafes in Lithuania and foreign countries. We will see almost exclusively young people at the tables, at that time in the West people of all age groups are entertained.

 

    According to R. Lazutka, the OECD calculations are based on the currently valid Pensions Law. According to him, pensions in our country are indexed every year, linking their size to the average salary, but, according to the interviewer, this is not enough.

 

     "The indexing formula is such that pensions are increased as much as the average salary of working people and the number of employed people increase. However, not only the average wage growth of the past three years is taken into account, but also the forecast of how much wages will grow in the next three years. But the Ministry of Finance tends to lower its forecasts. For the past few years, wages have grown by approximately 9-12 percent, while forecasts predicted 5-6 percent," explains R. Lazutka.

 

     As a result, he says, a situation arises where wages are growing faster than pensions, and the gap between working income and pensions is widening.

 

     The professor notes that rising salaries increase the income of "Sodra", and the budget of this institution is planned with more than 0.5 billion euro reserve in the coming years. So there is money for higher pensions, but the law works in such a way that it cannot be increased faster. And the OECD data shows where it will ultimately lead."

 


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