The ruling coalition in Latvia has reached a conceptual agreement in favour of the proposal from the Ministry of Welfare to perform pension indexation earlier this year, as confirmed by Prime Minister Krišjānis Kariņš.
According to the politician, this will be part of the promised aid to half a million Latvian residents who «truly need» support due to the rapid inflation. Pension indexation takes place in Latvia every year on 1 October.
The PM said on Tuesday, 19 April, due to limiter time, the coalition council failed to discuss other plans for precise support under conditions of rising inflation.
«We spent an hour and reached a conceptual agreement for this proposal from the Ministry of Welfare. Some corrections will be added later. We have to look ahead and come up with a mechanism available to any government in any situation to provide aid to the people who need it the most,» said Kariņš.
The politician said that so far it seems support may be provided in the form of housing aid, the costs of which are shared by the state and municipalities. Work will continue on specific solutions.
Housing aid is available to certain groups of residents. Even before 2022 the government in Latvia decided to try and expand its accessibility for residents whose income reduced as a result of restrictions imposed to battle Covid-19 pandemic.
As previously reported, the ministry has multiple solutions planned to compensate the costs that increased as a result of energy price rise, as LETA was told by the ministry’s deputy state secretary Diāna Jakaite.
According to her, to compensate residents’ increased energy-related costs, the ministry proposes multiple measures to be implemented in the second half of 2022 and continued next year. Some of those measures may be commenced in 2023.
It is planned for measures to be focused on groups of residents who are in need of support the most – seniors with low income, invalids and households with low income.
According to the Ministry of Welfare, if the goal is providing aid to households, there are three thresholds – guaranteed minimal income threshold, poor households threshold. All of them are evaluated and set by municipalities.
But if the goal is providing aid to specific individuals or groups of individuals, a system that includes specific information will be used. For example, the State Social Insurance Agency (VSAA) sees the income of pensioners and is thereby able to outline focused support for pensioners who are paid a specific pension amount, Jakaite explains.
At the same time, she said currently Latvia has no system that would allow singling out individuals income-wise.
She also said it is important to keep in mind what the purpose of focused aid is. For example, this way it is possible to support the poorest residents. A special support system will be formed for this purpose. She did say that if there are plans to support a much larger number of people, it is possible that universal aid without income evaluation would be a better solution.
Rapid inflation may force early pension indexation in Latvia
