Welfare Ministry offers to raise guaranteed minimum income to EUR 109

The Ministry of Welfare is preparing changes to the law in order to comply with the Constitutional Court judgment regarding the level of guaranteed minimum income (GMI). The Ministry proposes to set the GMI at €109 instead of the current €64, while the base for the calculation of the minimum old-age pension – €168 instead of the current €80, the Ministry said in a statement August 7.

The method uses calculation of the average household income per person of €544 in 2018. 

Minimum income thresholds apply to people with disabilities, seniors, people (households) with low and very low incomes.

Minimum income support is provided to an individual in the form of a minimum pension and state social security benefit. To a household with several people - through municipal social assistance.

The Minister for Welfare, Ramona Petraviča, will push forward the proposal to set a threshold of €163 or 30% of median income for old age and disability pensions, for people with disabilities since childhood – €191 or 35% of the median.

Currently, this threshold is €80 for pensions and €122.69 for people with disabilities since childhood. This threshold is used for calculating the pension, depending on the length of participation in labor force, by applying the factors 1.1, 1.3, 1.5 or 1.7, according to the LV portal. As the base increases, pensions will also increase accordingly.

As regards social assistance, the offer of €109 or 20% of the median for the first person in the household will be maintained, while the second and subsequent application of a factor of 0.7 from the first person.

It is also intended to establish a uniform level of income for an impoverished person and a disadvantaged person, which have been different in each municipality until now. LM proposes to set the income threshold of €272 or 50% of the median for the first person in the household.

Currently, Cabinet regulations provide that a family or person is to be recognized as impoverished if the average income for each member of the family per month does not exceed €128,06 in the last three months, but the local government may also set a higher threshold.

Implementation of Welfare Ministry's offer in 2021 could cost approximately €150 million to the State budget and €25 million to municipalities.

"With the raising of national social security benefits, minimum age and disability pension thresholds, we expect a significant decrease in the number of applicants for the guaranteed minimum income allowance, but more funding will be needed for municipalities to provide housing benefits and be received by a person regardless of the municipality in which he resides. The housing allowance should cover all costs related to housing – rent, heating, management, utilities and electricity,” said the Welfare Minister.

“Every year, of course, this aid needs to be revised. Accordingly, if the median income of the household is rising, minimum benefits must also be raised,” the Minister said.

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Economy
Economy