What does the pension accumulation system in Lithuania consist of?

The Lithuanian pension accumulation system consists of three pillars.

The first pillar is state social insurance, where working residents of Lithuania pay contributions to Sodra from their salary. A person acquires the right to an old-age pension when they accumulate the required length of service. The minimum length of service to qualify for an old-age pension in Lithuania is 15 years, the necessary length – 33.5 years (in 2024), but by 2027 it will reach 35 years. In order to accumulate years of service, contributions must be paid on at least 12 minimum monthly wages per year.

The second pillar is pension fund accumulation, where part of the contribution to pension funds is transferred from the state budget, and the employee themselves also contributes. Since 2019, the second pension pillar in Lithuania has been reformed so that the employee contributes 3 per cent of their gross salary, while the state incentive amounts to 1.5 per cent of the national average salary of the previous year.

The third pension pillar is completely private accumulation, where the employee, having concluded an agreement with a pension accumulation company, pays contributions of the desired size and frequency.