Too often than not residents in Latvia do not follow their pension, because in most cases the word pension is something they associate with the far future. Additionally, people sometimes do not understand how their pension is calculated. In reality, however, it is all simple – the future pension «grows» little by little every day. The pension amount depends on two main indexes: residents’ paid tax amount and how much the saved up money is able to earn residents in the future.

Part of Latvian residents’ pension (second pension level included) is invested into shares and securities, which allows for staying ahead of the inflation and provide capital increase and notably bigger pension in a long-term perspective. Finance Latvia Association board chairperson Sanita Bajāre explains why it is important to start thinking about future pension early and what the most important decisions each individual needs to make, because neither the state nor the pension’s manager can make them on their behalf.

«The first decision is picking a pension manager that will be in charge of the 2nd pension level’s saved up capital (which receives 6% of our wages). There are seven pension managers active in Latvia with 28 different deposit plans – active, balanced and conservatives. This is where we reach the next intersection – the future pension amount depends on how risky or cautious the deposit strategy is. Unfortunately, nowadays people rarely study the pension-related topics: only about 10% of all future pensioners look up information about 2nd level pension capital on Latvija.lv portal. On Manapensija.lv the percentage of these people is about 3%,» stresses Bajāre.

Read more @BNN