Parties at variance on potential pension rule changes / Article

Political parties in Latvia are sharply divided over whether citizens should be permitted to early withdraw their second-pillar pension savings, which are currently only accessible upon the granting of an old-age pension or in the event of the participant’s death.

Political Divide Over Pension Access

The opposition party “Latvia First” (LPV) argues that citizens should have full access to these funds, asserting that the savings are privately earned money rather than state funds. The party has applied to the Central Election Commission to begin collecting signatures for a referendum on the issue.

Conversely, the Greens and Farmers’ Union (ZZS) suggests that withdrawals should be restricted to healthcare purposes. Welfare Minister Reinis Uzulnieks noted that the party wants to avoid a situation similar to Lithuania, where funds were reportedly spent at online stores, though he admitted the party holds divided opinions.

The National Alliance (NA) and New Unity parties have cautioned that any discussions regarding medical withdrawals should occur after the upcoming Saeima elections to avoid complicating the voting process through multiple referenda.

Criteria for Emergency Withdrawals

MP Artūrs Butāns of the National Alliance stated the party could consider withdrawals to save the lives of participants or their family members, or to facilitate a return to the labor market. He emphasized that such measures should not include “beauty treatments” or “relaxation,” stating that tearing up the second pension pillar is not far-sighted.

Gatis Liepiņš of New Unity described the complete early withdrawal of pension savings as “absolutely unacceptable.” While he noted that disbursements for medical expenses are debatable, he insisted the conversation take place after elections to avoid a “charged atmosphere” of campaigning.

Baltic Regional Context

Latvia utilizes a three-pillar pension model: a state-guaranteed pension, personal savings in tandem with the state (the second pillar), and a voluntary private fund. Until 2021, participation in the first two tiers was mandatory for all workers across the Baltic states.

Estonia reformed its system in 2021, allowing participants to abandon the second pillar. This resulted in approximately 150,000 people withdrawing more than 1.3 billion euros. Many of these funds were used for everyday consumption, including the purchase of cars and household appliances.

Lithuania will implement a similar shift starting in 2026, ending automatic enrollment in the second pillar and allowing current participants to leave the system or withdraw up to 25% of their savings.

Official Government Position

The Ministry of Welfare stated in December that discussions with specialists are ongoing and amendments to the State Funded Pensions Law will be made once a suitable solution is identified.

Currently, the Ministry of Finance, the Ministry of Welfare, and the Bank of Latvia remain opposed to allowing the early withdrawal of second-pillar pension funds.