Petition drive revived on ManaBalss.lv to allow early withdrawal of second-pillar pension savings
A new signature drive has been launched on Latvia's ManaBalss.lv citizen initiative portal, seeking the right to withdraw second-pillar pension savings before retirement. The Saeima has already rejected similar proposals several times this year.
The question of whether people in Latvia should be allowed to withdraw money saved in the second pillar of the pension system before retirement has returned to the agenda. A new signature drive has been started on the ManaBalss.lv citizen initiative portal, calling for people to be allowed to decide for themselves what to do with their savings. The Saeima, Latvia's parliament, has already turned down such proposals on several occasions.
Initiative author Ģirts Bumbērs argues that the current pension system is too rigid and inflexible, because people cannot voluntarily access their accumulated funds before retirement. He proposes amending the Law on State Funded Pensions so that every second-pillar participant could choose to withdraw all of their accumulated capital. An application could be filed electronically through the State Social Insurance Agency or a pension fund manager.
What the proposal envisages
Before withdrawing the money, a person would have to receive an explanation of how the decision would affect their future pension, including an individual calculation. Bumbērs also proposes that personal income tax not be applied to the withdrawn amount. He stresses that the plan would not abolish the second pillar and would not oblige anyone to take out their savings.
According to the author, the funds could be used for medical expenses, buying or renovating a home, a down payment on a mortgage, repaying debts, children's education or starting a business. He believes greater freedom of choice would also boost public trust in the state and economic activity.
No political backing so far
Among lawmakers the idea has so far lacked sufficient support. On 21 May the Saeima rejected a similar initiative, and this year parliament has also considered several other proposals on early payout of second-pillar savings. These were submitted by residents and by political parties, including Latvija pirmajā vietā, the National Alliance and the Union of Greens and Farmers, but none won a majority of deputies.
Finance Minister and head of the United List parliamentary group Māris Kučinskis has also previously spoken against early payouts. He has said that the experience of Estonia and Lithuania with pension savings withdrawals mainly benefits traders, and expressed doubts about the usefulness of such changes.
