Pension indexation set for October 1 – increase to depend on insurance record length
From October 1, pension amounts up to €1,589 will be indexed, with increases ranging from 4.24% to 5.22% depending on years of insurance contributions. The change will affect 97% of pensioners.
Latvia's Welfare Minister Reinis Uzulnieks (Greens/Farmers Union) announced on Thursday that this year's annual pension indexation will take effect on October 1, as required under the Law on State Pensions. The indexation applies to the portion of a pension not exceeding €1,589, and according to the minister, it will affect 97% of all pensioners.
Increase tied to years of insurance
The size of the increase for old-age pensions will vary depending on a person's length of insurance record. Those with up to 29 years of contributions will see their pension rise by 4.24%. For those with 30 to 39 years, the increase will be 4.56%, while those with 40 to 44 years will get 4.89%. The largest increase, 5.22%, is reserved for people with 45 or more years of insurance record.
For other types of state pensions — service, disability, and survivor's pensions — as well as insurance benefits and supplements, a uniform index of 1.0424, or a 4.24% increase, will apply.
Who receives full indexation
Certain groups of residents have their pensions indexed in full, regardless of the amount cap. This includes politically repressed persons, people with first-degree disability status, participants in the cleanup of the Chernobyl nuclear disaster's aftermath, and those who received an old-age pension before reaching the statutory retirement age due to caring for a disabled child or raising five or more children.
How the index is calculated
The Welfare Ministry explains that the pension index is made up of two components: the actual consumer price index (inflation) over the preceding 12 months, plus a share of the positive real growth percentage calculated from the total insurance contribution wages.
