BA School of Business and Finance Research Ageing in Europe Students: Laura Mazure Marita Greidāne Endijs Melecis Uļjana Salija Reinis Vucāns Anna Mavļutova Research managers: Inese Mavļutova Terēze Korsaka

PLAN AGEING: - MIGRATION - NATURAL DECREASE OF CITIZENS FIRST PILLAR SECOND PILLAR THIRD PILLAR

Population of Latvia during the periods

The natural increase of the citizens during the period

The biggest aging problem in Latvia is the pension system!

SOCIAL SECURIY TAX – 34,09% Maternity benefits, disable pensions etc. – 14,09% 1st pillar -18% 2nd pillar – 2% 3rd pillar - private

1 st pillar Launched in The principle of generation and gender solidarity. Working population pays the old age pensions.

Black or shadow economy

2 nd pillar Launched on 1 July, 2001 Everyone’s social contributions are invested into the financial market and accumulated on the personal account Do not have to pay additional social contributions

Total redistribution of the pension capital contributions between the 1st and the 2ndtiers of the pension scheme Years1 st tier2 nd tier %2% %4% %8% %2% %2% %2% %2% from %6%

DEFICIT IN 2ND PILLAR

Number of persons involved in the second pension level- voluntary and obligatory

Investment in the second pension level( mill. Euro)

3 rd pillar Provides an opportunity to save money in private pension funds Managed by credit institutions, life insurance companies, investment firms and asset management companies Payments are placed in individual account

Savings made by employers from all invetments from

Participants in private pension plans from

Conclusion I The decreasing of workers who can pay pensions certainly will cause the raising of the retirement age and influence the living quality for seniors. Nowadays Latvia runs a three-pillar pension system, which was started to reform soon after independence. The share of pensions is divided in two parts-for the first pillar 18% and for the second pillar-2%.

Conclusion II The reasons for depopulation in Latvia are negative birth balance and migration problems. People in Latvia are having the possibility to increase their pensions by implementing 3 pillar pension system. The size of pensions paid has been increased because of inflation and salary increase. In Latvia there are seven private funds for now. The third pension level also supply insurance companies.

Proposals I Government should give benefits four young people to motivate them stay in Latvia and start businesses – offer them tax reliefs, courses for young entrepreneurs for free etc. Government should pay benefits four young families with children. The campaign should be made like discussion in simple words, so people could realize this huge ageing problem.

Proposals II Latvian government have to indicate specific future of 3 level pension system in country, so people will start to believe in it. The government should explain, where the taxes paid are going, so it could help to reduce the black economy.

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