The Ministry of Welfare (MOW) informed that the index consists of the actual consumer price index or inflation for the period from August 1, 2021 to July 31, 2022 and 50% of the amount of insurance contributions wages (which is the sum of all money from which year during which social insurance contributions had to be made) to the percentage of real growth.
In 2022, the amount of pensions and compensation or its part, which does not exceed 534 euros, ie 50% of the average salary of insurance contributions in the country for the previous calendar year, will be revised. This means that the entire amount of pension and compensation will be indexed, if it does not exceed 534 euros.
On the other hand, for those pensions and benefits that are greater than 534 euros, a part of the allocated amount will be indexed – the already mentioned 534 euros. The increase will depend on both the amount of pension and compensation and the applicable index. Exceptions are the politically repressed, people with group I disabilities and participants in the cleanup of the consequences of the Chernobyl nuclear power plant accident, for whom the entire amount of the pension will be indexed.
Similar to the previous one, this year too, various indices will be applied in the indexation of old-age pensions, depending on the person’s accumulated insurance experience. The greater the length of insurance, the greater the index will be applied and the greater the increase in the old-age pension a person can expect.
- If the insurance length of service is up to 29 years, then in addition to the actual consumer price index, the indexation of pensions will also take into account 50% of the real increase in the amount of insurance contributions;
- if from 30 to 39 years old, as well as if the pension was granted for work in harmful and severe or particularly harmful and particularly severe working conditions, – 60%;
- if from 40 to 44 years – 70%,
- but 45 years and over – 80%.
Thus, for those people whose insurance experience is up to 29 years, the index 1.2287 will be applied in the revision of the old-age pension; if the insurance period is between 30 and 39 years – the index 1.2314 will be applied; if the insurance period is between 40 and 44 years – the index will be 1.2341. On the other hand, if the insurance period is 45 years or more, the index 1.2369 will be applied.
LM explained: for example, if the amount of the old-age pension is currently 370 euros, then for a senior citizen with up to 29 years of insurance, the amount of the pension will be 454.62 euros (84.62 euros more) from October of this year.
if the insurance period is between 30 and 39 years – the amount of the pension will be 455.62 euros (by 85.62 euros more), if the insurance period is between 40 and 44 years – the amount of the pension will be 456.62 euros (by 86.62 euros more ). On the other hand, if the insurance period is 45 years or more, the pension will increase to 457.65 euros (87.65 euros more).
In August, the granted supplements to the old-age and disability pension for one year of insurance service, accumulated until December 31, 1995, will also be indexed by applying the actual consumer price index and 50% of the real increase in the sum of insurance contributions. When indexing the premium, the relevant index will be applied with a premium of approximately 1.16 euros for each year of insurance until December 31, 1995, and a supplement of approximately 1.74 euros for each year of insurance until December 31, 1995, if the old-age pension was granted until 1996 on December 31, 1996, or the disability pension was granted and the age required for the old-age pension was reached by December 31, 1996.
This means that the existing amount of the premium, which is currently EUR 1.16 and EUR 1.74 per year of insurance, will be revised by applying the index of 1.2287. Therefore, people who received 1.16 euros for each year of service accumulated until the end of 1995 will receive 1.43 euros, and those who received 1.74 euros will receive 2.14 euros.
For example, a pensioner who receives an old-age pension of 400 euros for a total of 45 years of insurance service and a supplement of 29 euros (for 25 working years (from 45 years) until the end of 1995) will receive an old-age pension of 494.76 euros from October and supplement to pension 35.75 euros.
Old-age, retirement, disability and survivor’s pensions and benefits granted or recalculated until July 31, 2022 will be indexed.
LM stated that the purpose of indexation of pensions is to ensure the protection of granted pensions and benefits against the decline in purchasing power and to ensure that they do not lose their value.
LM noted that it should be taken into account that personal income tax (IIN) may be withheld from the total amount of pension and allowance, which reduces the amount to be paid. Pensioners do not have to do anything themselves – pension indexation will be provided by the State Social Insurance Agency and it happens automatically. The non-taxable minimum, from which IIN is not applied, is 500 euros for pensioners.
LM also informed that in 2022 state pensions and compensation for loss of working capacity and compensation for loss of breadwinner will be reviewed in the month of August this year, but the increase obtained in the indexation for August will be paid simultaneously with the pension or compensation to be paid in September 2022.
This means that in August pensions and benefits will be paid in the amount received so far, but in September they will be paid in an already increased (indexed) amount together with the unpaid indexation increase for the month of August.
In mid-July, the Saeima adopted the amendments recognized as urgent to the Law “On State Pensions”, providing that this year state pensions will be indexed two months earlier than usual – already 1. in August. LM explained – this means that in August, pensions and granted pension supplements will be paid in the amount received so far, but in September they will be paid in an already increased (indexed) amount together with the unpaid indexation increase for the month of August.