Almost 40% of Luminor customers in Latvia who contribute to the 3rd pension pillar are over 55 years of age, according to the bank’s data. According to Anželika Dobrovoļska, Head of Pension Products at Luminor, it is good that people in their pre-retirement years are thinking about making additional savings, but younger people are still saving too little.

According to the data compiled by the bank in all three Baltic countries, the situation in Lithuania does not differ significantly from that in Latvia, where the population over the age of 55 is more often involved in the 3rd pension pillar. Meanwhile, the opposite trend is observed in Estonia: people under 55 are more likely to use the 3rd pension pillar to make additional savings for old age, while only 15% are over 55.

“To feel financially secure in old age and to avoid a significant fall in living standards, income after the active work life should be at least 70-80% of pre-retirement income. To achieve this, savings at the 2nd pension pillar alone will not be enough, which is why I recommend that young people start saving more at the start of their working lives. On average, people spend 20 years in retirement in Latvia, and according to the Organisation for Economic Co-operation and Development (OECD) , seniors currently receive an old-age pension of only 54.3% of their previous income. This means that many seniors now have to adjust their daily lives to the decline in income,” says Anželika Dobrovoļska, Head of Pension Products at Luminor.

As the expert reminds, it is important to make additional savings yourself and choose an appropriate pension investment plan to take care of your old age. The longer the time until retirement, the more active the plan you should choose. However, if you have 10 years or less until retirement, the level of risk should also be gradually reduced to avoid unexpected capital fluctuations.

Luminor data show that 43% of the bank’s customers in the Baltics choose the 3rd pension pillar plan suitable for their age. Latvians and Lithuanians are the most conservative in the choice of the 3rd pension pillar plan, while Estonians are ready to take the biggest risk.

The expert points out that when choosing the optimal investment strategy, it is important to take into account one’s age, the planned investment horizon, and overall attitude towards risk, including one’s financial capacity to take losses. A strategy that is inappropriate for the investment horizon is also unlikely to produce the best possible result, so it is worth checking the bank’s website or seeking specialist advice before investing. For example, if you are less than five years away from retirement, it is important to choose a more conservative strategy, while younger people who will reach retirement age after more than 10-15 years should not be afraid of risk, as market downturns are short-term, but in the long term, higher risk can give higher returns.

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