Government backs 8.4% pension hike
The government decided on Thursday to increase the value of the state pensions index to 1.084, which means that the average pension will increase by 8.4% starting 1 April this year.
In detail, after indexation the national pension amounts to €205.21, the base amount to exactly €191.6496 and the value per year worked to €6.627 per month, government spokespeople said.
The change would increase the old-age pension of a person with 15 years of pensionable service to €291.05 euros a month. With 30 years of pensionable service, the new size of the state pension will be €390.46 a month, and with 44 years, €483.24.
The annual re-indexation of pensions will cost the government approximately €113.6 million this year, while last year's hike cost €97.6 million. The indexation effective 1 April means some 349,600 pensioners are affected, the Baltic News Service reported.
In addition to pensions, the daily rate of the state work ability allowance will also be recalculated. The value of the daily rate for a person with no work ability is €13.79, and the total work ability allowance is €413.7 a month starting 1 April.
For a person with partial work ability, the allowance amounts to €7.86 a day and €235.81 a month. The work ability allowance is calculated by the Unemployment Insurance Fund (Töötukassa) per each calendar month.
The value of the index is calculated to the extent of 80% based on the change in last year's social tax receipts, and to the extent of the remaining 20% based on the change in the consumer price index (CPI).
The CPI rose by 3.4% last year while figures available from the Finance Ministry show that 9.7% more social tax money than in the previous year were directed into pension insurance.
Editor: Dario Cavegn