Lithuania's Untapped Pension Funds Highlight Financial Choice Paralysis

Lithuania's pension reform has left billions of euros from second‑pillar pension funds idle in bank accounts. According to data from the central bank, about €2.9 billion was paid out in April, with roughly €2 billion remaining on bank balances. Only a small share of these savings has been used for loan repayments or invested in life insurance and third‑pillar pension schemes, while most people have not decided what to do with their funds, leading to a “choice paralysis” effect.

At the same time, the Lithuanian government faces a sharp increase in borrowing needs. Finance expert N. Mačiulis warned that the state will need to raise nearly €7 billion this year and that interest payments have risen from €232 million in 2022 to €1.1 billion in 2023, with projections of €2 billion in the near future. He called for cuts in public spending, greater efficiency and the use of artificial‑intelligence tools to optimise state institutions, as the surplus in the social security budget does not cover the overall fiscal shortfall.