Bank of Latvia economist warns against negative effects of second pillar pension reform
Oļegs Tkačevs, an economist at the Bank of Latvia, argues that early withdrawal of second pillar pension savings, as done by Estonia and Lithuania, would harm Latvia's economy in the long run and reduce future pensions.
In a published opinion, Oļegs Tkačevs, an economist at the Bank of Latvia, warns that discussions about allowing early withdrawal of second pillar pension savings are dangerous. Although Estonia took this step in 2021 and Lithuania this year, Tkačevs emphasizes that Latvia should not automatically follow its neighbors.
The economist reminds that the second pillar is not a separate savings account but an integral part of the pension system. Currently, 15 percentage points of social insurance contributions for pensions go to the first pillar, and five to the second. If this capital is spent today, future pensions will be significantly lower.
Tkačevs cautions that the economic consequences of such a reform would be negative in the long term and urges careful assessment of potential risks before making any decisions.
/nginx/o/2026/06/16/17721838t1h3d43.jpg)
