Saeima approves changes to service pension system

RIGA - Saeima deputies today adopted amendments to nine laws in the final reading, which provide for gradual changes in the existing service pension system from 2027.

The changes are necessary to ensure fair, equitable and financially sustainable system of service pensions.

The changes will not apply to persons who, at the time the amendments come into force, are or will be entitled to a service pension under the laws and regulations currently in force.

"Currently, service pensions are granted according to how long a person has worked in a particular post or job and his or her age. However, the rules vary from sector to sector, each with its own specific conditions. This has created inequalities between professions, with some having easier conditions for pensions and others more difficult. Calculations also differ. Moreover, these conditions are not regularly reviewed to take account of changes in the labor market and industries, and are costing the state budget increasingly more," said Saeima Budget Committee Chairwoman Anda Caksa.

The amendments provide for a gradual change of the system affecting those employees who have so far been able to retire earlier than the general retirement age, including soldiers, police officers, border guards, firefighters and others. In the future, only those whose work involves a high risk to health or life, such as firefighters and rescue workers, will be eligible for service pensions.

The changes are intended to reduce disparities between recipients of service pensions and the rest of society, creating a fairer overall system. They are to be implemented from 2027 onwards. At the same time, social protection will be maintained for those whose work involves special risks.

The amendments provides for a gradual increase in length of service and early retirement age by six months each year over five years. Service pension will be calculated on the basis of the remuneration received by the person during the last 10 calendar years.

The minimum and maximum amounts of service pensions will also be reduced by 10 to 20 percent.

Prosecutors and judges will no longer be eligible for service pensions, but they will be paid special pensions, as are diplomats. Ballet and circus artists, choir singers, puppeteers, orchestra artists, soloists and theater actors will also be affected by the changes, but they will be provided special support, including support for retraining.

According to the planned changes, service pensions will no longer be paid to persons working in jobs that do not involve a regular risk to health and life.

Changes to the retirement pension system have also been prompted by the current very rapidly growing fiscal burden on the pension system. In five years' time, the state budget expenditure on these pensions is expected to exceed EUR 200 million a year.