Latvian pension indexation and replacement ratio

Latvia’s pension replacement ratio has been reported at 43%, a figure significantly lower than the European Union average of 58%. This indicates that retirees experience an income reduction of nearly 60% compared to their working years.

To mitigate this, Latvia conducts annual pension indexation on October 1st to protect purchasing power against inflation and reflect wage growth. The indexation is calculated using the consumer price index and real growth in insurance contribution salaries. For the current cycle, pensions up to 1,589 euros are subject to full indexation, while amounts exceeding this threshold are only partially indexed. Certain groups, including people with Group I disabilities, receive full indexation on their entire pension.

While the State Social Insurance Agency noted that the average increase exceeds 10 euros per pensioner, the implementation has faced criticism. Some recipients reported that the adjustments are insufficient to cover the rising costs of food, utilities, and medicine, with some monthly payments as low as 383 or 440 euros causing significant hardship.