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Pension reforms in Lithuania: background summary

  • Under current legislation, the following types of pensions are payable in Lithuania: old-age pension, disability (work incapacity pension from 1 July 2005), survivor’s and orphan’s pension, early old-age pension, loss of breadwinner’s pension and retirement pension. The latter two were paid before the entry into force of the Law on State Social Insurance Pensions (‘the Law’).
  • Until 1 January 1995, the statutory age for the old-age pension was 55 for women and 60 for men. After 1 January 1995, it was increased every year by four months for women and by two months for men. On 1 January 2009, it was set at 60 years for women and 62 years and 6 months for men. The Law was subsequently amended again to increase the statutory age every year by four months for women and by two months for men until it reaches 65 years for both women and men in 2026.
  • Until 1 January 1995, the obligatory term for state pension insurance payments for the old-age pension was 20 years for women and 25 years for men. After 1 January 1995, this was increased every year by one year for women and men until it reached 30 years (1999 for men and 2004 for women). After the entry into force of the new version of the Law in 2018, it will be gradually increased to 35 years in 2027.
  • The old-age pension is calculated on the basis of a person’s state pension insurance record and insured income. The old-age pension consists of a basic part, a supplementary part and (from 1 July 2007) a bonus for the length of insurance payments. After the new Law enters into force in 2018, the pension will comprise two parts: a general part and an individual part. The general part will depend on a person’s insurance payments and the amount of the basic pension will be approved by the government. The individual part of the pension will depend on the person’s salary.
  • A pension accumulation system was introduced in 2014. A person who has not reached the statutory age for the old-age pension, and who is covered to receive the basic and supplementary part of a pension may enter into a pension accumulation agreement and have part of his or her social insurance contributions accumulated in a pension fund. If this is the case, the amount of the old-age pension is reduced for the period of that accumulation. Legislative amendments adopted in 2012 enshrined the accumulation of old-age pensions from three different sources. In 2013, new participants in the pension accumulation system signed pension accumulation agreements under new terms and conditions, providing for the accumulation of a portion of the state pension insurance contribution and (from 2014 onwards) for additional pension contributions paid by the participant and additional pension contributions from the state budget for the participant.
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