On the table – the issue of pension accumulation benefits and the investment account: the objective is to incentivize savings for the future

“In this working group, we plan to analyze the so-called investment account as a kind of savings, investment instrument, which would include other existing investment instruments for the population and possibly change them a bit. Also, because of the life insurance, and because of the benefits of pension accumulation in a sense, how to help to pay better taxes ”, says R. Bilkštytė.

According to her, residents who currently invest have to pay taxes on their earnings every year and, if they have suffered losses, they cannot carry them over to the following year. This makes investing unattractive.

According to her, the possibility of carrying forward losses and reducing future income tax could be ensured by an investment account, it could offset the gains of different investments with losses, and taxation for the population would be simpler.

“We would not only like to abolish the benefits or review what is available, but we are also looking at how to improve certain conditions for the investor population,” says R. Bilkštytė.

It could not answer whether the personal income tax benefits currently applied to the third pillar of pensions, unit-linked life insurance, could be abolished; for the moment, there will be a debate.

“We look at who and how to invest in the third tier now, how much and who uses, how popular it is with the population to use the investment tools that exist now. And we would like to add that the desire to invest would be more popular among the population, if they have the funds to invest more freely, not only in real estate ”, says the deputy minister.

Although Finance Minister Gintarė Skaistė previously stated that the second pillar of pensions is not reviewed in the working group, R. Bilkštytė stated that it will also be discussed.

“We are reviewing all benefits, but that does not mean that we are touching, not touching; there is no prior determination that we are touching, reviewing, scratching or removing any benefits. We are only seeing how it works, if it is necessary to clarify the benefits that they exist: although it works well, maybe some clarification is still needed. Or maybe those benefits need to be abolished, of course, maintaining legitimate expectations, and everything else, if an abolition decision is foreseen “, explains the deputy minister.

According to her, the objective is to reorient measures so that as many people as possible can start investing and do it more widely.

“We review all investment conditions, all investment instruments, whether they can be improved, changed, abandoned or merged, so that there are common rules for all. As I said, now there are some exceptions, there are some injustices ”, explained the vice minister.

He assured that the working group would also examine the taxation of investment funds or other collective investment organizations (ICOs), if the current regulation was justified.

The specific decisions to be presented to the government could become clear in the fall, when the working group is completed.

Currently, the working group includes almost 40 representatives from various institutions, public bodies, business associations.

Majauskas: I would suggest not to abolish the existing benefits

The Chairman of the Seimas Budget and Finance Committee, who participates in the working group, takes the position that investment-related benefits should not be suppressed.

“I would be inclined to suggest that the existing incentives that encourage people to save and accumulate should not be abolished. And, in my opinion, it is very important to see an investment account as a substitute for existing savings”, – says M. Majauskas.

He believes that the investment account has paid off in many EU countries, encouraging people to save and save money.

“This measure is widely used by the Nordic countries in particular, and I think it would make sense to apply it here in Lithuania,” says the chairman of the commission.