In Latvia, pensions are reviewed every autumn on 1 October through a process known as pension indexation. This is stipulated by the Law on State Pensions. The purpose of pension indexation is to protect pensions against a decline in purchasing power and help preserve their value.
Pension-related issues are highly sensitive and can sometimes be difficult to understand. The Ministry of Welfare has therefore prepared answers to the most frequently asked questions on this topic.
How Will Pensions Be Indexed This Year?
This year, pensions and compensation payments, or the relevant portions thereof, of up to €1,589 will be indexed. This amount corresponds to the national average insurance contribution wage for the previous calendar year.
This means that the entire pension amount will be indexed if it does not exceed €1,589. For pensions exceeding €1,589, only a portion of the pension will be indexed, namely the aforementioned €1,589. The increase will depend on both the amount of the pension and the applicable index.
Exceptions apply to politically repressed persons, people with Group I disabilities, participants in the clean-up operations following the Chernobyl nuclear power plant accident, and individuals who have been granted an old-age pension under more favourable conditions at an earlier age because they cared for and raised a child with a disability or five or more children. For these groups, the entire pension amount will be indexed.
How Is the Index Used to Recalculate Pensions Determined?
The index is calculated using the actual consumer price index (in simple terms, inflation) and a proportion of the real growth in the total amount of insurance contribution wages, expressed as a percentage. The total amount of insurance contribution wages is a financial term that, in simple terms, refers to the combined amount of income on which social insurance contributions were payable during the year.
To determine the actual change in the total amount of insurance contribution wages in a given year, the total for that year is compared with the total for the previous year. This shows how the amount has changed over the past year and produces the insurance contribution wage index, which reflects the actual change in the total amount of wages subject to insurance contributions.
However, this figure also reflects the impact of inflation. To determine the real change, or real growth, in the total amount of insurance contribution wages during a given year, the effect of inflation must be excluded. To do this, the formula for calculating real growth in the total amount of insurance contribution wages, as set out in Cabinet of Ministers regulations, divides the insurance contribution wage index by the consumer price index.
Will Different Indices Be Applied This Year Depending on a Person’s Accumulated Insurance Record?
Yes. This year, different indices will be applied when indexing old-age pensions, depending on the length of a person’s accumulated insurance record. The longer the insurance record, the higher the index applied and the greater the increase in the old-age pension a person can expect.
In addition to the actual consumer price index, the indexation of old-age pensions will take into account a proportion of the percentage growth in the real total amount of insurance contribution wages. The applicable proportions are as follows:
- For an insurance record of up to 29 years, 50% of the real growth in the total amount of insurance contribution wages will be taken into account.
- For an insurance record of 30 to 39 years, as well as for pensions granted for work in harmful and arduous or particularly harmful and particularly arduous working conditions, 60% will be taken into account.
- For an insurance record of 40 to 44 years, 70% will be taken into account.
- For an insurance record of 45 years or more, 80% will be taken into account.
Accordingly, the following indices will be applied when recalculating old-age pensions:
- Up to 29 years of insurance record: 1.0424
- 30 to 39 years: 1.0456
- 40 to 44 years: 1.0489
- 45 years or more: 1.0522
For example, if the awarded old-age pension is €600, a pensioner with an insurance record of:
- Up to 29 years will receive €625.44 from October this year, an increase of €25.44.
- 30 to 39 years will receive €627.36, an increase of €27.36.
- 40 to 44 years will receive €629.34, an increase of €29.34.
- 45 years or more will receive €631.32, an increase of €31.32.
For the indexation of other state pensions and insurance compensation payments, as well as for determining supplementary payments to old-age and disability pensions for each year of insurance record accumulated up to 31 December 1995, the actual consumer price index and 50% of the percentage growth in the real total amount of insurance contribution wages will be applied. The resulting index will be 1.0424.
When indexing supplementary payments, the relevant index will be applied to the supplement of €1.72 for each year of insurance record accumulated up to 31 December 1995, and to the supplement of €2.58 for each such year where the old-age pension was granted by 31 December 1996, or where a disability pension was granted and the statutory retirement age for an old-age pension had been reached by that date.
This means that the existing supplementary payment rates of €1.72 and €2.58 per year of insurance record accumulated up to the end of 1995 will be adjusted using the index of 1.0424. As a result, people who currently receive €1.72 for each qualifying year of insurance record will receive €1.79, while those who receive €2.58 will receive €2.69.
For example, a pensioner who has been awarded an old-age pension of €610 based on a total insurance record of 45 years and receives a supplementary payment of €43 (for 25 years of employment up to the end of 1995) will receive an old-age pension of €641.84 and a supplementary payment of €44.75 from 1 October.
Please note that personal income tax may be deducted from the combined pension and supplementary payment, reducing the amount actually paid. This is because personal income tax was not deducted from the social insurance contributions paid while the person was working.
How Can You Find Out How Much Your Individual Pension Will Increase?
Individuals can check their pension amount on the www.latvija.lv portal or by visiting any State Social Insurance Agency (VSAA) customer service centre. Contact details are available on the VSAA website.
The VSAA website also features a pension and insurance compensation calculator. By entering the amount of their pension, supplementary payment or compensation, individuals can calculate the amount they will receive from 1 October this year.
Open the VSAA pension indexation calculator for 2026.
Do Pensioners Need to Do Anything Themselves to Receive the Indexation Increase?
No. Pensioners do not need to take any action. Pension indexation is carried out automatically by the State Social Insurance Agency (VSAA) every year on 1 October.
This means that, from October this year, everyone entitled to a pension will receive it at the indexed rate. There is also no need to worry about whether the VSAA knows how much each person is entitled to receive following indexation. The agency has all the necessary information, and the recalculation is carried out automatically.
Will All Pensions Increase as a Result of Indexation This Autumn?
Pension indexation applies to all recipients of old-age, disability, service and survivor’s pensions, provided that their pensions were granted or recalculated by 30 September this year.
On 1 October, compensation payments for loss of working capacity and compensation payments for the loss of a breadwinner will also be indexed, provided that they were granted under the Law on Compulsory Social Insurance against Accidents at Work and Occupational Diseases.