OREANDA-NEWS. On 19 January 2009 was announced, that the poll about savings habits shows that 38 % of respondents rely on the pension guaranteed by the state. The estimates made by Swedbank show that the state guaranteed pension may provide only 35-40 % of the current income of people. Another 22 % of the polled residents said that in their retirement their state guaranteed pension would be also supplemented with contributions made into the second pillar of the pension and this means that they may receive their pension in the range of 50 to 60 % of their current income.

The estimates show that in addition to the state guaranteed pension (the first pillar of the pension scheme), it is possible to receive 70 and more per cent of the current income by making pension contributions into the second and third pillar of the pension scheme, as this may ensure the customary quality of life. The poll demonstrates that only 17 % of people in their retirement count on their pension taxes paid and regular pension contributions made into the second and third pillar of the pension scheme, while 16 % of respondents indicated that they would rely on their personal savings in their retirement. 7 % of respondents said that in their retirement age they would count on financial assistance to be provided by their children.

Trends:

Women considerably more often plan to live on the state guaranteed pension during their old age than men (43 % of women vs. 26 % of men) as well as to live on the financial assistance provided by their children (9 % of women vs. 2 % men);

Men considerably more often rely on their pension taxes paid into the first and second pillar of the pension scheme than women (33 % of men vs. 17 % of women), as well as they would rely on their personal investments (22 % of men vs 14 % of women);

Respondents aged from 20 to 29 like the respondents aged from 30 to 39 most often said that they would rely on their pension taxes paid into the first and second pillar of the pension scheme in their old age (this was stated by 29 % of the respondents aged from 20 to 29 and 31 % of the respondents aged from 30 to 39);

Residents with average and above average income most often rely on the state guaranteed pension (37 % of respondents with average income and 34 % above average income), while residents with high income most often said that their pension would consist of the pension taxes paid and savings made in the second and third pillar of the pension scheme (this was stated by 35 % of respondents with high income).

Residents in regions more frequently than residents in cities and towns had stated they would rely on financial assistance provided by their children in their old age.

Residents in Riga more often stated that their pension would consist of the pension taxes paid and regular contributions made into the second and third pillar of the pension scheme.

“In order to ensure that it is possible to relax according to the merits after you have finished your active employment, it is advisable if you would take care of your pension capital yourself and take advantage of not only the second pillar of the pension scheme but also the third pillar or the so- called private pension scheme. It must be emphasised that there is no need for huge investments to make well-considered savings: optimal amount to ensure financing for the retirement or sudden decrease in your income is already within the range of 5 to 10 % of your monthly salary. Thus upon retirement it will be possible to cover not only compulsory payments but also to ensure proper health care and decent old age,” says Mr Harijs Svarcs, CEO of ka Swedbank Investment Management Company.

In Latvia, there is a three pillar pension system which is based on the solidarity of generations and personal contribution made by each individual as a source of funding for the old age. Already for decades people around the world make additional savings for their retirement into their private pension funds. By setting aside even a small part of income during the years of your active employment, it is possible to accrue a considerably larger pension in the long run. In Latvia it is possible to make contributions into pension funds on individual basis or with intermediary of employer and amount of contributions and their frequency is unlimited.