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From January 1 of each year. pensions are increased by an indexation factor. It is calculated on the basis of the actual or projected wage fund for the current, past 3 and 3 future years.
More precisely, to the extent that the amount of money earned by all the country’s employees increases or decreases.
It has been growing rapidly in recent years, leading to a significant increase in pensions each year. For example, since the beginning of this year, they have increased by 8.11 percent.
The finance ministry released the latest economic forecasts on Tuesday. Among other things, they publish a forecast of how the payroll will change in the coming years.
According to the ministry, it should decrease by -0.8 percent this year, but increase by more than 4 percent annually over the next three years.
Calculating the 7-year indicator, it would appear that the wage fund increases by an average of 6.3 percent. Old-age pensions should also be increased by this amount.
According to Sodra, currently the average old-age pension is 376.1 euros. This would increase it by € 24 next year.
The Ministry of Social Security and Labor has promised to respond how many pensions should be indexed to the latest estimates by the Ministry of Finance, but did not respond on Wednesday night.
Do you want to change the law before the elections?
However, current law also stipulates that pensions will not be indexed if the percentage change in current or next year’s gross domestic product (GDP) or in the wage bill is negative in the economic development scenario.
As previously announced, the Ministry of Finance predicts that due to the economic crisis caused by the coronavirus, Lithuania’s GDP will decrease by 7% this year. Therefore, pensions should not be increased starting next year.
However, the tv3.lt portal managed to discover from unofficial sources that the ruling coalition wanted to change the law before the October elections this year and still index pensions.
However, Tomás Tomilinas, a member of the Lithuanian Peasants and Greens Union and vice chairman of the Seimas Commission on Social Affairs and Labor, neither confirmed nor denied it.
Tom Tomilin
“I do not have that information, so I cannot confirm it. I think the situation is currently being analyzed. As with the increase in the monthly minimum wage,” said the politician.
By the way, due to the coronavirus, the Seimas approved a special law, according to which in August all pensioners will receive a lump sum of 200 euros in addition to the regular pension.
Pensions are small, but there should be no changes.
Professor Teodoras Medaiskis of the University of Vilnius acknowledged that the law provides for exceptions when pensions are not indexed. However, in his opinion, politicians are likely to circumvent the rules.
Theodoras Medaiskis
“If the index turns out to be positive, politicians are likely to index it from the end. They are unlikely to monitor reserves. However, I think that if the formal rule were triggered by a drop in GDP, the nerves of politicians they would not survive, so to speak, and pensions would be indexed despite everything.
Especially considering that it is so easy to borrow here now, 200 euros are distributed to everyone. Apparently it will be just as easy to decide the rules for ourselves or we will be able to read them accordingly. It is highly likely that even if the rule works and pensions do not need to be indexed, they will be to some extent, “said T. Medaiskis.
According to him, there is no “sacred order” that cannot change politics. Unless indexation is in some way enshrined in the Constitution.
According to the professor, once the pension indexation rules have been adopted, they should be followed and not rotated according to time:
“But the interests of the people, the minority of current pensions are also understandable. However, I would say that if indexation rules were not followed, it would be more bad than good. On the other hand, it is also impossible not to understand the reasons for try to increase pensions.
Furthermore, compared to other EU countries, we lag behind both the replacement rate (ie the ratio of pensions and wages is lower – past aut) and the total amount of pension spending. In part, this can be understood and justified by such behavior. But still, if the rule has already been adopted, it would be better to follow it.
According to Sodra, almost 610,000 people currently receive old-age pensions. population. Of these, 68 thousand. still working.
Retirees who have completed the required duration of service during their careers receive an average pension of € 398 per month. For those who have not accumulated seniority, a pension of just over 210 euros is paid.
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