Pension system of latvia: Case study approach

Abstract

The current paper offers a case study approach for testing several options and hypotheses. The need for Pension Reform in Latvia has been the result of a steadily increasing aging of the population. By 2001 a new three-level pension system was introduced in Latvia aiming to reduce the effect of demographic risks and demonstrating the country’s intention to provide an optimal public or private compound in old-age provision. Nevertheless,the demographic prognosis of European Commission estimates that by 2060 the population in Latvia will reduce from 2.2 million to 1.7 million people, and the number of elderly people will almost double. The potential impact of demographic change on the age structure and the size of population is dramatic and still the main problem that cast the doubt on the ability of state mandatory pension scheme to provide the appropriate pension level.Personal financial planning, personal investments are important. The objective of this research work is to investigate whether the existing Pension system in Latvia is working effectively under changing economic environment. It also analyzes the role of Private voluntary pension scheme and the current demographical situation with a flow of emigration. The research work aims at offering several options for the improvement of the situation.
Keywords: Economic development, Demography, Pension Levels, Private voluntary pension scheme, Solidarity,
Retirement.