OECD: Latvia should raise minimum pensions sharply

The Organisation for Economic Co-operation and Development (OECD), of which Latvia is a member, recommends that the country substantially raises its basic pensions to reduce old-age poverty and pension inequality, the OECD says in a report published March 7.

"The relative old-age poverty rate is high, especially among those older than 75 years and among women. The level of the basic pension (state social security benefit in the case of old age allowance) is very low and has not risen in nominal terms for more than 10 years.

"There is substantial room in Latvia to increase the level of the basic pension from the current level of 8% of average wage towards the OECD average of around 20%," the report suggests.

It also recommends lowering the minimum contribution period of 15 years required for the minimum pension and calls to ensure that each additional year of contribution results in a higher minimum pension benefit as currently only an increase of the contributory period at specific points results in greater benefits.

The organization also calls to introduce survivor pensions in a way that does not create unintended redistribution, and to increase contributions by micro-enterprise employees and the self-employed so that they reach those of regular employment.

The OECD also calls to incorporate service pensions back to the main pension scheme as most of the people who receive it combine work with claiming pensions.

 

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