Influence of Pension Funds and Life Insurance on Old-Age Pension

Danguolė Jablonskienė


The situation of SoDra (State social insurance) in Lithuania is very complicated, thus the Lithuanian Parliament, the Lithuanian Government, and all citizens of Lithuania are becoming more aware of the state of current and future pensioners that is in need of acute rearrangement. Furthermore, that fact is confirmed by the changes of the pension system reform launched on 1 January 2013. Lithuania’s economy is still largely affected by the economic crisis, but before the crisis the country did not build the base of traditions characteristic to the Western world. In the developed countries of Western Europe, when a child is born, a pension fund and life insurance contract is concluded. During this period from birth to death, a solid private sum of money is accumulated, which allows making a living and not changing the lifestyle one has been living until retirement. For instance, in Germany a state pension is about 1100 Euros, and a private one amounts to 4500-5500 Euros per person. Therefore, we can assume that the main source of living in elderly age is a private and not a state pension. On the contrary, in Lithuania the main source of living is a state pension. Though the Lithuanian government encourages long-term accumulation by introducing tax privileges for individuals who have signed their pension accumulation and life insurance contracts, this is not enough. The decrease of average earnings does not prompt the accumulation for the future, as simply there is no such amount available. Moreover, the increase of unemployment in the country and emigration are important factors as well. Thus, aiming for steady pension income shaping, economic and business growth and decrease of unemployment is necessary. No less important is education of the public to the effect that life at old age is highly dependent not only on the state’s contribution but also on each future pensioner’s personal contribution.


social health insurance; pension; pension system reformation; life insurance; second and third step pension funds

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"Intellectual Economics" ISSN online 1822-8038 / ISSN print 1822-8011