The aging society in Latvia will continue to increase the burden on the pension system even under optimistic demographic scenarios, so timely adaptation to changes is necessary, according to a study by the Riga Graduate School of Law (SSE Riga), as reported by LETA.
According to a study, the population of Latvia may decrease from 1.86 million in 2025 to approximately 1.34 million by 2060. At the same time, the number of working-age residents will drop from 1.17 million to around 750,000, while the number of pensioners will grow to nearly half a million.
This means that in the future, there will be only about one and a half workers for each pensioner, compared to two workers currently. Such changes will increase the financial burden on the pension system.
The author of the study, Doctor of Economics Sergey Gubin, predicts that even under the most optimistic scenarios, the impact of an aging society will persist. He notes that the pension system needs to adapt now to ensure its sustainability in the future.
Analyzing possible development scenarios, the study concludes that even a higher influx of migrants — about 10,000 people per year — will only partially compensate for the population decline, and by 2060, it may amount to around 1.7 million. However, even in this case, the trend of an aging society will continue.
In turn, an increase in the birth rate to 1.8 children per woman would slow down the population decline, but the share of pensioners would still continue to grow and could reach 35–37% of the total population.
The study also analyzed the sustainability of the pension system. If the current social contribution rate of 20% at the first pension level is maintained, it is predicted that the size of pensions relative to the average wage may decrease from about 60% in the early 2020s to around 35% by 2060. At the same time, the savings from the second pension level could improve the overall size of pensions; however, this would require long-term investments and possibly an increase in contributions.
The author of the study notes that a comprehensive approach will be needed for the sustainability of the pension system, including gradual reforms, stimulating labor market activity, and economic growth.
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