On Thursday, 3 March, the Saeima in the second and final reading adopted amendments to the Law on State Pensions that provide for a higher pension indexation as of 2017, whereby the pension indexation will be based on 50% of insurance contribution from wages instead of the current 25%.
“Pension indexation reflects the economic situation – the higher the inflation and wage growth, the more pensioners receive each year. The amendments stipulate higher pension indexation, which is directly linked to the wage growth in the country. These amendments were developed in cooperation with the Ministry of Welfare, taking into account the available budget,” said Aija Barča, Chairperson of the Social and Employment Matters Committee.
According to the amendments, the increased pension indexation coefficient will constitute 1.0508 in 2017 and 1.0413 in the following two years.
The indexation increase will require additional EUR 3.42 million in 2017, EUR 17.61 million in 2018, and EUR 33.79 million in 2019.
The state pensions are reviewed on 1 October each year, based on the consumer price index and 25% of the real increase in wages from which insurance contributions are levied. Indexing is applied to all pensions or portions thereof which are below 50% of the national average wage from which insurance contributions are levied.
The amendments also aim to prevent the situation of some staff members of the interior service receiving smaller state pensions than the previously calculated long-service pensions.
Saeima Press Service