Pension reform

The goal of reform started in the year 2003 is transition to a three-pillar pension system based on accumulation. :

  • Pillar I – the employed pay taxes to Sodra (State Social Insurance Fund) and at the retirement age receive pension from the only source, i.e., Sodra;
  • Pillar II – a portion of funds paid to Sodra may be allocated by the employed to a private pension fund without any additional payments. At the retirement age, they will receive pension from two sources, i.e., Sodra and the private pension fund. In such case, the portion transferred to Sodra will be proportionally decreased.
    Any person may start accumulating pension after signing a pension accumulation agreement that will come into effect on 1 January of the next year.
    The pension accumulation agreement may be drawn each year by 1 July, but the labour market newcomers (who were issued the social insurance certificate for the first time) – by 1 October.

    Amount of allocated assets:

    3.5 per cent of wage – in the year 2005;
    4.5 per cent of wage – in the year 2006;
    5.5 per cent of wage – in the year 2007 and in later years.

    Based on data of the Social Security and Labour Ministry, the average wage at the close of I Q 2005 amounted to LTL 1,270, the average pension in June 2005 – LTL 396.


  • Pillar III – the additional voluntary accumulation of own income (wage or other legal income) by an individual. Such accumulation is stimulated by the state, instalments to the pension funds are not taxable.

    A person participating in all tree Pillars of the pension fund has an opportunity to accumulate the largest pension assets. Thus your social wealth depends not only on the situation in the country but also on timely investment solutions.

    Example of participation in all tree Pillars of the pension fund

    Picture: Pillar I – Sodra’s pension; Pillar II –accumulation of a portion of instalment to the state social insurance fund in the pension funds, e.g., SEB pensija; Pillar III –voluntary accumulation in the pension funds, e.g., SEB pensija plius.

    Important information. Pension accumulation companies do not guarantee return on investment, it may fluctuate and depends on the investment results.
        • AB SEB bankas