Publication: The Latvian NDC Scheme: Success Under a Decreasing Labor Force
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Date
2019-04
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Published
2019-04
Author(s)
Stabina, Sandra
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Abstract
Latvia introduced a nonfinancial defined contribution (NDC) scheme in 1996 as it transitioned to a market economy. Despite a 20 percent decline in the working-age population from 1994–2016, the ratio of contributors to old-age pensioners rose from 1.6 to 2.1 given a steady increase in formal labor force participation and 5-6 percent real per capita wage growth. Projections show that long-term financial balance will be maintained through 2070, despite the threat of a projected 50 percent decline in the working-age population. Budgeted reserves will cushion the continued transition into a two-pillar public pension scheme. Latvia’s most important long-term policy challenge is to create the domestic investments and economic growth to reward younger workers for remaining in the country.
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“Stabina, Sandra; Palmer, Edward. 2019. The Latvian NDC Scheme: Success Under a Decreasing Labor Force. Social Protection and Jobs Discussion Paper,no. 1902;. © World Bank. http://hdl.handle.net/10986/31648 License: CC BY 3.0 IGO.”
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