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There are two proposals in the Seimas on how to increase these benefits, one from the opposition and the other from the rulers. Governors estimate that pensions could grow about 7 percent next year.
The proposals were approved by the Seimas on Thursday after their presentation and will now be considered by the committees in November.
“Pensions must increase and all the economic conditions exist for this. (…) Increasing pensions is one of the mechanisms to overcome crises,” said Tom Tomilinas, member of the Social Affairs Commission.
According to the “State” Rima Baškienė, the amendments “will send a message” that the Seimas is determined to index pensions so that “people don’t have to worry about pensions not being indexed.”
Both the opposition and the rulers propose to suspend the indexation of pensions only when the calculated indexation coefficient does not reach one percent. It is proposed to remove other reservations.
Conservatives believe that the link between the criterion of applying the pension indexation factor and changes in gross domestic product (GDP) should be dropped.
The law now stipulates that indexation is not carried out if the last percentage, that is, the Economic Development Scenario published in the year of calculation of the pension indexation factor, shows a negative percentage change in GDP at constant prices for the year calculation of the indexing factor and the following calendar year.
“This criterion will have little or no impact on Sodra’s budget revenue, as it is not a tax revenue base. (…) The Sodra budget does not change depending on whether the GDP indicator is one or the other. But even the minimal deviation of GDP towards the negative side could be decisive and we would not be able to pay those indexed pensions ”, said the conservative Monika Navickienė, who works in the Social Affairs Committee, presenting the amendments to the opposition.
The governors propose a greater margin of maneuver in the indexation of pensions.
It is proposed to abandon the rule that the calculated indexation coefficient applies only if the increase in pensions will be sufficient to pay the income of the social insurance type of pension, that is, the planned expenditure of the social insurance type of pension will not exceed the planned income from this type of pension. 75% is waived. Rules of contribution to the pension and balance of benefits of Sodra.
The modifications propose to subject the indexation formula to the fluctuation of the wage bill in the three years prior to the indexation and the forecasts for the same period.
We also want to drop some of the conditions to stop the indexation of pensions in relation to changes in the wage bill over the years, which would turn negative. The indexation of pensions would then continue on the basis of the seven-year average growth of the wage bill.
However, conservative Gintarė Skaistė, a member of the Budget and Finance Committee, said that some of the rulers’ proposals are “dangerous for public finances, as there is an obligation to index pensions even when there is not enough money to pay. current pensions “.
“In a real crisis, the budget would really blow up,” he said.
The Seimas will consider both draft amendments to the Social Security Pensions Law in early November. They will still be evaluated by the Government.
The indexation of social security pensions has been carried out since 2017.
In 2017, due to indexation, pensions grew by 6%, in 2018, by 6.94%, in 2019. – 7.63% in 2020 – 8.11 percent.
According to the latest economic development scenario, calculating the pension indexation coefficient, old-age and disability pensions could grow by at least 7.17% in 2021.
If roughly the same number of pensions were indexed, the average old-age pension would increase from € 377 this year to € 404 next year, and the average old-age pension with required time of service from € 399 to € 428.
Indexing pensions for next year would require an additional LTL 249 million from Sodra and the state budget. euros.
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