1. Financial tools to maintain welfare society
LATVIA
Financial tools to maintain welfare society

2. Agenda Participants in the project Country – Latvia
BA School of Business and Finance
MEP IP project – Ageing in Europe

4. Participants: Laura Polovjanova Karīna Galicka Sanita Gorbačova
Linda Žūriņa
Zane Zolmane
Alīna Sprengeļe

5. Our country - Latvia:

6. BA School of Business and Finance(2):

8. Financial tools to maintain welfare society
IP MEP Ageing in Europe
Financial tools to maintain welfare society

9. Welfare Death related benefits Disability and illness Careers
Families and children
Unemployed people
Social welfare payments and work
Farming and fishing
Extra social welfare benefits
Education
Older and riterided people
Supplementary Welfare Schemes

10. Tax system in Latvia Consolidated Budget Government budget
Local government
Gorvernment basic
Local government basic
Government special budget
specialbudget

11. Government basic budget Government special budget
Tax
Government basic budget
Government special budget
Local government budget
Corporate income tax
100%
Individual income tax
20%
80%
Real estate tax
The state social insurance payments
Value added tax

12. %
Before working age
Working age
Retired people
Natural increase
2008 14
64,9
21,1
-7 058
2009
14,1
65,2
20,7
-8 220
2010
14,2
64,7
2011
64,2
21,6
-9 900
2012
14,3
63,6
22,1
-9 300

13. Taxes as a financial tool to maintain welfare in Latvia
Personal income tax
State mandatory social insurance payments
Value added tax
Real estate tax

14. Personal income tax characteristics in Latvia
An individual is liable for tax on his income
as an employee
as a self-employed person
individual must meet the requirement of residence in Latvia
Employer is obligated to deduct the amount of income tax and national insurance

15. State Mandatory social insurance payments
income gained by an employee
a set of measures organised by the State

16. Three-Tier Pension System in Latvia
The First Pillar (state compulsory unfunded pension scheme);
The Second Pillar (state funded pension scheme);
The Third Pillar (private voluntary pension scheme).

17. Devision between 1st and 2nd in budget
Years
1st tier
2nd tier
18% 2%
2007
16% 4%
2008
12% 8%
2009
2010
2011
2012 no

19. Insurance as a welfare instrument

20. Population structure in Latvia by age groups in 2012

21. Natural increase in last 5 years

22. Average age of life in Latvia by gender

23. Participation of other organisations
Local governments:
Partial refund of the of money that has been spent for the medicine;
Partially covered expenses for public utilities;
Local communal apartments;
Etc.
Red Cross;
Latvian Support Association for low-income people "DACE“:
To provide information about legal and social issues,
To organise free cultural events,
To arrange art exhibition of disabled children "The world around me“.

24. Conclusions
Benefits are provided by Special government budget which is formed each year and it consists of contributions from pension insurance, dividends and other income;
Latvians can improve their future pension with 3rd pension level or universal life insurance;
Latvia has unarranged pension system;
Pensions and benefits depend on paid in to a budget taxes;

25. Conclusions (2)
The negative natural increase and migration creates a negative impact on pension and benefit system of Latvia;
Planned special budget cannot cover all needs on benefits and pensions;
Local governments has been considered as an essential support to elder people;
Low - income people receive help from non-profit organizations;
People live with no vision about their future and old age.

26. Suggestions
People should choose Universal life insurance with savings and with attraction of funds;
Government must motivate to pay taxes;
System of paying pensions should be improved and labor must be educated;
To improve birth rates country should provide well-prepared benefit system;
We need to produce new generation to pay taxes for our future pension and different benefits;

27. Thank You For Your Attention!!!!
Paldies Par Uzmanibu!!!
Thank You For Your Attention!!!!