The Latvian NDC Scheme: Success Under a Decreasing Labor Force

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Date

2019-07-16

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INAPP

Abstract

Latvia introduced a nonfinancial defined contribution (NDC) scheme in 1996 as it transitioned to a market economy. Despite a 20 percent decline in the working-age population from 1994-2016, the ratio of contributors to old-age pensioners rose from 1.6 to 2.1 given a steady increase in formal labor force participation and 5-6 percent real per capita wage growth. Projections show that long-term financial balance will be maintained through 2070, despite the threat of a projected 50 percent decline in the working-age population. Budgeted reserves will cushion the continued transition into a two-pillar public pension scheme. Latvia’s most important long-term policy challenge is to create the domestic investments and economic growth to reward younger workers for remaining in the country.

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Keywords

Pensioni, Previdenza

Citation

Palmer E., Stabina S. (2019), The Latvian NDC Scheme: Success Under a Decreasing Labor Force, Roma, INAPP, WP, n. 13 <https://oa.inapp.org/xmlui/handle/20.500.12916/450>

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https://oa.inapp.gov.it/handle/20.500.12916/450

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