Sustainability of the pension system in Latvia
ENRegardless of the fact that the Latvian pension system seems to be advanced and modern, we have recently found cause to question the sustainability of that system. The discussions on this subject have been aroused by the various alarming economic and social processes: a decrease of the social budget, the economic crisis and breakdown, the outflow of population, bad demographics, an increase of the aged population, illegal aspects of the national economy and somewhat inconsistent pension politics. The purpose of this study is to research and analyse the conditions necessary for the building of a sustainable pension system. In order to achieve the latter, the authors describe the impact of economic and social factors on the sustainability of the pension system, analyse the legislation regulating the Latvian pension system, and formulate the criteria of sustainability. The following scientific research methods have been utilised in the preparation of this work: the analytical method, the comparative method, the historical method and the logical and abstractedly constructive method. The authors have concluded that, within the existing system, a 70% replacement rate for old age pensions in Latvia is not a realistic goal and that a proper balance between family support, solidarity support and support from individual savings shall be the basis for further pension reforms within the whole European Community. A sustainable pension system will reduce the impact of inflation on savings and pensions after retirement.
