Flexible retirement pathways - Latvia

Flexible retirement is widely used in Latvia. It practically manifests itself in combining work with a pension after reaching the statutory pensionable age. There are no restrictions on continuing to work beyond the pensionable age and it is possible to combine receiving a full pension with income from work, either as an employee or a self-employed person, full-time or part-time, and with no limits imposed on earnings. Early retirement is possible at the earliest two years before the pensionable age, but it is not possible to combine the early-retirement pension with the continuation of employment. Partial pensions do not exist in Latvia. At the time of claiming a pension, the accrued individual pension capital is divided by an age-specific life expectancy coefficient. By continuing to work after retirement, new pension capital is formed, which can be converted again into a new portion of pension benefit; the recalculation may not be requested more often than once a year. Working pensioners and their employers pay slightly lower social insurance contributions because they are exempt from unemployment and disability schemes. Consequently, employees who have reached the pensionable age are eligible for all the same benefits as working-age people, except for unemployment benefits and disability pensions. Many Latvian pensioners continue to remain in employment: in December 2023, 19.7% of oldage pensioners were still working (17.3% for women and 24.2% for men). This proportion remained quite stable over the last five years. Two factors are responsible for the high level of employment in the older age groups: (a) inadequately low pensions, which force many pensioners to look for additional sources of income; and (b) depopulation of the country, creating a shortage of younger workers in the labour market.