The FM conceptually supports the second pillar cost postpart / day

According to the MoF, such a solution could help citizens better protect long -term savings and expect market recovery, thus preventing the need to record losses in adverse market conditions.

At the same time, the MoF notes that the basic principle of the pension system in Latvia is the first and second -pillar linking, that is, the provisions of both levels are combined to form a single pension. If only the second pillar is postponed and the first pillar pension is granted, this principle is disrupted.

Therefore, the involvement and position of the Ministry of Welfare as a responsible industry authority is required to evaluate and implement such a proposal, explains the MoF.

It has already been reported that Angelika Dobrovolska, Chairman of the Board of Swedbank Investment Management Company, previously told LETA that the Latvian government should introduce a sustainable solution that would allow citizens to postpone the second pension level capital costs or to ensure a gradual cost from the investment plan.

Dobrovolska explains that the Latvian pension system is currently unable to sufficiently protect people from the risks of financial market fluctuations at the time when protection is most needed – during retirement. The existing procedure stipulates that, when reaching retirement age, a person must withdraw the amount of capital accumulated in the second pillar of the entire pension. At a time when the stock market is falling, the pensioner is forced to record losses without being able to wait for market recovery.

« At the moment, the only way to avoid losing losses is to delay retirement. But this is not possible for everyone – due to health status, employment or personal circumstances, » the company spokeswoman said, pointing out that pension managers have been calling on the Bank of Latvia and the Ministry of Welfare to introduce a sustainable solution to postpone a second pension.

She notes that such an approach has already been used – during the Covid -19 crisis, temporary amendments to the law were adopted, which allowed prospective retirees to postpone the cost of two years. Following the rapid decline in the financial markets in the second half of 2020, the rise in stock exchanges allowed prospective retirees to retain the amount of significant parts. So this practice is possible and proven its effectiveness. There is no reason to hesitate – a similar option should be introduced as a constant solution, especially at the moment when the markets are experiencing a downturn.

There is a three -level pension system in Latvia. The first pillar pensions are paid to current pensioners from social payments collected in the budget. The second or funded pension is that part of the social contributions of workers are invested in the financial sector. On the third level, there are private pension funds, where funds can be deposited on a voluntary basis.