The new value of the pension index, according to the draft regulation, is 1.076. This means an increase of 7.6 percent on average in pensions and the daily rate of the work ability allowance, spokespeople for the ministry said.

"Along with increases in wages, also pensions will rise, and the wage rise of last year is reflected in this year's pension rise, which is even bigger than expected," Minister of Social Protection Kaia Iva (IRL) said.

The minister said that, for instance, the average size of pension for people with an employment record of 44 years will be €446.5 starting Apr. 1, more than €30 more than the average of €415.6 so far.

The annual reindexation of penions will cost the government approximately €97.6 million this year. The indexation concerns 375,600 pensioners and an estimated 62,600 recipients of the work ability allowance. 

The present system of indexation of pensions took effect from Jan. 1, 2008, when the change in the index was pegged to the receipts of social tax to a bigger degree.