Pre-reform service record in the Latvian pension system contributes to old-age poverty in Latvia

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One of the roots of the poverty risk for the age group 65+ lies in the mechanism for translating the pre-reform service record into the Notional Defined Contribution pensions’ scheme enacted after the 1995 pension reform. The formula of initial capital used in pension calculation results in unfair and polarised benefits, with large share of very small old-age pensions. No attempts to fundamentally reform the existing mechanism have been made so far, but parametric changes took place in the past and are urgently needed now as well.

Authors : Feliciana Rajevska and Olga Rajevska