Latvia’s Pension System: At the Crossroads Between the Past and the Future

The study analyses the development of Latvia’s pension system over the thirty years following the 1995 reform, assessing the extent to which its original objectives have been achieved: fiscal sustainability, adequate retirement income, and protection against old-age poverty. The study finds that Latvia’s pension system is among the most fiscally sustainable in the European Union, while its main challenge remains the adequacy of pensions and the high risk of poverty among older people. Drawing on data from international organisations, international experience, and pension policy analysis, the study provides recommendations for the further development of all three pension pillars and for strengthening pension system governance.

Authors: Kristīne Dambe, Edgars Voļskis, Lelde Kiopa.

Designing Better Pensions in the Baltics

The best pension systems are designed for ordinary people: busy, imperfect, and preoccupied with priorities other than planning for retirement. This paper introduces the main behavioural principles that shape pension outcomes, including defaults, framing, reminders, incentives, friction and trust. It discusses how these ideas apply in the Baltic context and uses examples from Estonia, Latvia, Lithuania and other countries to illustrate what works, what does not, and why.

Authors: Heidi Reinson and Kristīne Dambe

The Long-Term Sustainability of Latvia’s Pension System:
Macroeconomic and Microeconomic Perspectives

This study assesses the long-term sustainability of Latvia’s pension system from both macroeconomic and microeconomic perspectives, using projections of socio-economic and demographic trends up to 2070. It analyses alternative scenarios for the allocation of pension insurance contributions between the first and second pension pillars and examines their implications for public finances and future pension adequacy. The study also explores how different choices of second- and third-pillar pension schemes may affect individuals’ retirement outcomes.

Author: Edgars Voļskis.

Five Years Since The Estonian Second Pension Pillar Reform: What Have We Learned?

In 2021, Estonia reformed the second pillar of its pension system, allowing participants to opt out of the scheme and withdraw their accumulated savings before retirement. This policy paper examines the background to the reform and assesses its impact over the five years since its implementation. The findings offer both cautionary lessons and practical insights for other countries considering similar reforms.

Author: Heidi Reinson.

What Should Latvia’s Next National FinTech Strategy Look Like?

A study “What Should Latvia’s Next National FinTech Strategy Look Like?” was designed to support the process of writing Latvia’s new Fintech strategy with independent, evidence-based analysis. It examines the situation in the fintech industry in Latvia, various foreign approaches to planning the development of this field, and their success stories and failures are analyzed, as well as recommendations for the development direction of Latvia’s fintech sector are provided.

The authors of the study are economists and experts of the Baltic Finance Center Madara Ambrēna, Alexander Apostolides, and Kristīne Dambe.

Impact of Expanded Sanctions Against Russia and Belarus on Financial Service Provision in the Baltics: A Business Perspective

This specialized expertise report examines the impact of the European Union’s expanded sanctions against Russia and Belarus on the availability of financial services for businesses in Estonia, Latvia, and Lithuania. The sanctions were introduced following Russia’s full-scale invasion of Ukraine in February 2022.

The authors of the study are economists and experts of the Baltic Finance Center Alexander Apostolides, Inga Mukāne, and Robin Poynder.

Four Recommendations For Latvia’s Financial Sector Development Policy 

This study builds on research conducted by the Baltic Financial Centre on mortgage lending, the pension system, financial sector development, and other issues relating to financial markets. Although each study examines a different policy area or market segment, their findings are remarkably consistent on a number of issues and point to the same underlying institutional and policy-making challenges. This study highlights four closely interconnected principles that should underpin financial sector development policy.

Autori: Kristīne Dambe, Māris Kūlis

Developing Latvia’s Capital Market And Investment Culture

This study analyses the development of Latvia’s capital market in the context of European financial policy, with particular focus on the role of investment culture, private investors, and household savings in its further development. The study finds that, despite recent progress in the corporate bond market and policy initiatives, Latvia’s capital market still significantly lags behind more developed European markets. Drawing on policy documents, research by international organisations, statistical data, a population survey, and interviews, the study highlights the need to move from individual initiatives towards a broader investment ecosystem approach, in which household participation, investment habits, and the strengthening of long-term investment culture play a central role.

 Authors: Madara Ambrēna, William Schaub, Lelde Kiopa, Andrejs Jakobsons, Kristīne Dambe