Policy's reforms for meeting aging population needs in Lithuania

Abstract

In demographic terms, Lithuania suffers from a declining and ageing population. With the aging population the country faces challenges to ensure independent and healthy living for elderly population by providing enough income and social services in need. In order to face these challenges Lithuania as many other EU countries underwent economic and social reforms for a better meeting society’s needs generally and vulnerable groups, including elderly, specifically. The aim of the article is to discuss pension and care systems reforms and its effects for elderly people population. The article is based on statistical, secondary data, legal documents and scientific literature analysis. In Lithuania three-pillar pension system is operating. Contrary to all other CEE states with a funded second pillar, Lithuania chose not to make its second pillar mandatory. The fast take-up of second pillar pensions, which was supported by a massive advertising campaign, shows that voluntary solutions can also work. To achieve a balanced structure, the third pillar needs to be developed further. Its development might be a question of time and rising income, but tax incentives are currently too weak to get it off the ground. Nevertheless, pension reforms in Lithuania have resulted in a much more sustainable system with a widely accepted funded element.