PM defends her stance on pensions

Prime Minister Laimdota Straujuma on Tuesday evening defended her position regarding pensions payments, stoutly denying accusations by pensioners that she had broken her word in any way. 

"I don’t feel like I have let anyone down because I did not make any promises before [the discussions about] the [2016] budget. The government decided to discuss the pension increase together with budget,” she said at a news conference after the regular Cabinet meeting on Tuesday evening.

Straujuma reiterated that she supported the plan to start recalculation of pensions set during the crisis years in 2016, starting with the smaller pensions of up to 200 euros a month. The Welfare Ministry supports the proposal to recalculate those pensions based on the year when they were calculated originally.

"The proposal by [Welfare Minister Uldis] Augulis will require additional 30 million euros from the next year’s budget. I am not ready to back granting of 30 million euros for pensions in the next year’s budget. I don’t see where we could get this kind of money. Money doesn’t grow on trees,” the prime minister said.

Finance Minister Janis Reirs, commenting on the Finance Ministry’s proposal to start recalculation of pensions not in 2016 but in 2017, underlined that "the government has only so much money”.

Before the Cabinet meeting on Tuesday he confirmed to the BNS newswire that the government had decided to start discussing all budget-related issues, including recalculation of pensions, in August.

The Latvian parliament's social and labor affairs committee on Tuesday approved draft amendments to the pension law that do not include the provisions on the recalculation of the pensions set during the crisis years.

The Latvian Pensioners' Federation (LPF) expressed dismay at the decision, accusing Straujuma of breaking pre-election promises and threatening protest actions on July 8, the inauguration day or president-elect Raimonds Vejonis.

Upon retirement, the size of an individual pension in Latvia is calculated based on the social insurance contribution wage index, also called the capital index. During the financial and economic crisis this index was smaller than 1 and the pensions calculated for people at that time are smaller than those paid to people, who retired during the years of the economic boom when the capital index was higher than 1.

The Welfare Ministry has proposed legislative amendments under which those pensioners, whose pensions were originally calculated, using the capital index value below 1, should get their pensions recalculated based on the year when their current pensions were calculated. Namely, for those, who retired in 2010, new pensions will apply from the beginning of 2016; those, who retired in 2011, would start receiving recalculated pensions in early 2017, and the retirees of the years 2012-2015 would get new pensions from January 2018.

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