Assessment of Latvian pension system in the context of European Pillar of Social Rights

Abstract

Latvian pension system is considered to be one of the most sustainable, but it should be mentioned that financial sustainability may be achieved in different ways and sometimes the aspects of sustainability are estimated without considering system’s ability to provide equity, equality and adequacy of retirement provision. The European Pillar of Social Rights has been proclaimed in 2017. According to this statement delivering on the principles and rights defined under the Pillar is the joint responsibility of the EU institutions, member states, social partners and other stakeholders. The 3rd chapter devoted to social protection and inclusion establishes the key approaches to determining the minimum income, old age income and pensions. In particular, everyone lacking sufficient resources has the right to adequate minimum income benefits ensuring a life in dignity at all stages of life, and effective access to enabling goods and services; workers and the self-employed in retirement have the right to a pension commensurate to their contributions and ensuring an adequate income; everyone in old age has the right to resources that ensure living in dignity. The aim of the paper is to estimate actual compliance of Latvian pension system with the requirements of the European Pillar of Social Rights. The main findings show that the European Pillar of Social Rights creates completely new challenges to Latvian pension system, e.g. an ability to stay financially sustainable and comply with the principles of adequate income provision and ensuring living in dignity. Therefore more extensive and complex options of system’s improvement should be proposed and assessed.