Latvians least ready for retirement in Baltics

Of the three Baltic states, people in Latvia are the least ready for retirement, according to research by the SEB bank. From a possible ten points out of ten, no Baltic state scored higher than Estonia's 3.7, reported Latvian Television (LTV) Wednesday.

Latvia's pension system is three-tiered. The 1st tier--compulsory payments from the social insurance tax contributions--is made up of non-funded payments partially used for paying pensions to those currently retired.

The 2nd tier (compulsory) is invested in bank-managed pension funds, while the 3rd consists of voluntary contributions to pension funds.

According to the research, Latvians have the worst knowledge about the pension system, and most of the people here rely on the state pension as their future source of sustenance.

Those with lower wages will have it difficult to get by with a state pension as tiers 1 and 2 could make up only a pension equivalent to 50% of the current wage.

Of Latvians, 70% are pessimistic, saying their financial standing won't be better than that of the current pensioners. Despite this, only 25% of working people are saving for old age. 

The people of Rīga LTV surveyed on the street testify that. "I don't think about things so far away. I'm interested in things closer to me," one Roberts told LTV. 

"The times are changing, and when I will be retired there'll be no pensions," said Natālija.

According to estimates, almost half of the working people from 30 to 55 years old risk becoming poor upon retirement. About 77% plan on continuing to be employed throughout their retirement, while 44% expect support from their family or children. Others hope on their savings and selling their real estate.

A total of 1700 people 30-55 years old participated in the survey.

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