So How Wealthy Is a Latvian Pensioner?

It must be said that statistics and politics are like a glove on a hand. From statistics one can extract "some" number and politically ascribe or remove significance from it. Something similar has developed in the dispute about pensions, which - as it turns out - are not only for old age (there are also service, disability and breadwinner pensions).

Until now I had formed the view that a pensioner is a person who, financially, is very close to poverty. This view was formed both by information that had appeared in the media and by personally known pensioners. However, reflection and the desire to dig deeper were prompted by an article in the magazine "Kapitāls", in which a quite clever and educated fellow from IBS Prudentia, by the name of Ģirts Rungainis, sharply positioned himself against pensioners and rhetorically asked - why do we have to pay such large pensions?

Substantiating his view as follows:

Such an attitude of pensioners is what prevents the possibility of creating support for young families in seeking a solution to the demographic problem. The majority of today's pensioners once worked building communism, but for the last 20 years have let the country go to ruin. They did not have enough children when the opportunity was there.

Despite the fact that Latvia ranks 87th (out of 195) in life expectancy with an average life expectancy of 72.7 years (men - 67.3 and women - 77.7 respectively), Latvia has 577,683 pensioners. And the average pension is 173 lats. Based on this figure, one might conclude that above 173 lats - that is the large pensions, which the aforementioned gentleman apparently proposes to cut. The only question is how many "large" pensions are there?

Looking at the SSAA statistical data, we see that 63% are below the average pension and 37% are above. No less interesting is the distribution of pensions.

However, the social budget is consumed not only by pensions but also by other types of benefits. True, the only other one to come close to hundreds of thousands is the family state benefit with 347 thousand. Only that little benefit is 8 lats. :)

What the aforementioned expert and the state conceal, but what follows from the figures - the fact that there are many female pensioners in Latvia (i.e., they live a terribly long time) as well as the fact that it is not a sudden birth rate that will solve the problem, but the existence of children of working age (at least 18 years old). Preferably boys, because according to observations of international organisations - these tend to earn more than girls, get ill less and don't give birth. Also the fact that girls have a tendency to "marry away" abroad.

SUMMARY:

Dear friends (ladies, gentlemen, comrades, or however one might address those on the other side of the screen), all of this is demagoguery!

The effect of the wishes and methods set out above could also be achieved if the average gross salary in the country were not 445 lats (in hand 308 lats) but, for example, 4,450 lats (in hand 3,000 lats). Whereupon the social security tax payment would be not 156 lats but 1,560 lats. Which in turn means that one working person could support 9 pensioners.

Such a salary is nothing extraordinary in old Western Europe. Yes, it requires economic and strategic thinking from politicians and Soviet-era experts, which is evidently lacking. A striking example is R. Karnīte, who would gladly see Latvia become a small China. And that is by no means the worst example.

What happens next? The retirement age is raised. Given that pension funds at various levels have multiplied among us, each person chooses and participates in shaping their own future pension.

P.S. By the way, voter - have you seen face to face and spoken with the MP you voted for? No? Then why did you vote?!

Sources used:

[1] http://www.apollo.lv
[2] http://lv.wikipedia.org
[3] http://www.vsaa.lv