Lithuanian pension savers have saved more than €8bn in the country’s defined contribution (DC) pension system, Lithuanian Investment and Pension Funds Association (LIPFA) chair, Tadas Gudaitis, has revealed.

Speaking at the PensionsEurope CEEC Forum 2024, hosted by LIPFA in Vilnius on 17 September, Gudaitis gave an opening address highlighting the success of Lithuania’s second-pillar pension system.

“Over the past two decades, Lithuania, like many others, has experienced growth, reforms, and transformation. Today, we can confidently say [our] pension accumulation system is delivering real benefits for Lithuanian employees – our future retirees. More than €8bn has been accumulated in pension accounts, representing the largest investment by Lithuanian citizens outside of bank deposits.”

During the day, Bank of Lithuania board member, Simonas Krėpšta, provided an in-depth analysis of Lithuania’s pension system, focusing on challenges such as declining demographic rates, low replacement rates, and fiscal pressures on the first pillar. He presented potential solutions, including incentivising employer contributions to the second pillar and strengthening the underdeveloped third pillar.

Furthermore, experts from Lithuania, Croatia, Poland, and Estonia shared their experiences of pension systems in their countries. A key takeaway was the importance of political stability and consistency in policies to build a strong pension system that gains the trust of its citizens. Key factors that will ensure higher replacement rates in the future include increased contribution rates, greater employer participation in DC schemes, and broader coverage of the working population in pension accumulation programmes.

However, experts argue that those countries which have partly withdrawn from pension accumulation systems earlier and used funds earmarked for the future to address current needs, face significant challenges in restoring higher accumulation levels and potentially achieving higher replacement rates.

In addition, keynote speeches from the European Insurance and Occupational Pensions Authority (EIOPA) head of policy and supervisory convergence department, Patrick Hoedjes and European Commission deputy head of unit for social protection, DG EMPL, Valdis Zagorskis, set the stage.

Hoedjes emphasised the importance of multi-pillar systems, while Zagorskis presented findings from the Pension Adequacy Report, discussing the replacement rate ratio level across Europe, and the large gender pension gap across member states. A panel discussion followed, highlighting the role of pension funds for economic growth, and the need to allow pension funds to invest in more productive areas in some member states.

In his closing remarks, Pensions Europe CEO, Matti Leppälä, emphasised that, regardless of the resilience of the system, increasing savings will be essential in the face of changing demographics in Europe. He insisted that, while pension funds are managed at the national level, the European Union still plays an important role. With the new European Commission mandate focusing on boosting growth and competitiveness, pension funds will unavoidably be part of the EU agenda.

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