Latvia (LV)
Latvia is a parliamentary republic and EU member state on the eastern shore of the Baltic Sea, bordered by Estonia, Lithuania, Russia, and Belarus.
Retirement & Pension in Latvia
State pension, contribution refunds, private pension vehicles, and international agreements.
Latvia operates a three-pillar pension system: the 1st Pillar (state notional defined contribution — NDC — pension funded from current contributions), the 2nd Pillar (mandatory funded pension with real investment accounts), and the 3rd Pillar (voluntary private pension savings). Latvia's pension system has been a model for pension reform in transition economies but faces significant long-term pressure from the country's shrinking and ageing population. The retirement age is rising to 65 and further increases are likely. Private pension savings (3rd pillar) are increasingly essential to avoid a significant drop in living standards at retirement. Average pension in Latvia is relatively modest at approximately €400–600/month — significantly below the EU average.
State Pension
Latvia's 1st pillar state pension is a Notional Defined Contribution (NDC) system: your lifetime VSAOI contributions are recorded in a notional account and earn a "notional interest" rate linked to the growth of the total insured earnings in Latvia (approximately wage growth). At retirement, the accumulated notional capital is converted to a monthly pension using an annuity factor based on life expectancy. Unlike traditional defined benefit pensions, the benefit depends directly on your contribution amount and timing. This system was designed to be financially sustainable but means pensions closely reflect actual contributions.
65 years (since 2025, after gradual increase from 62 over several years). Future increases to 67 are under discussion as life expectancy rises.
Minimum contribution period: 15 years to qualify for any state pension. With fewer than 15 years: no state pension; social assistance pension (sociālā nodrošinājuma pensija) of approximately €171/month instead.
Log in to VSAA online services at vsaa.gov.lv/e-pakalpojumi with your eID or internetbanka. View your accumulated pension capital, contributions by year, and estimated pension amount. The VSAA pension calculator gives projections based on current contributions continuing.
Latvia pays state pensions to persons residing abroad. EU/EEA residents: pension is paid to your home country bank account in EUR. Non-EU countries: paid to a Latvian bank account or via international transfer (SWIFT). You must notify VSAA of your address change. Latvia has social security agreements with many countries avoiding double pension contributions. Confirm your specific situation at vsaa.gov.lv.
Pension Contribution Refund on Leaving Latvia
Persons who have accumulated 2nd pillar (funded pension) capital and are leaving Latvia permanently before retirement age (65). EU nationals: the 2nd pillar capital remains in their account and is accessible at retirement age. Non-EU nationals may apply for 2nd pillar capital return under specific conditions.
1st pillar (NDC) pension capital CANNOT be refunded or withdrawn — it remains in your account payable at Latvian retirement age wherever you live. 2nd pillar capital: only accessible at retirement age in standard cases; early withdrawal available for persons who permanently emigrate under specific conditions.
Pension age is 65 for standard 2nd pillar access. Early withdrawal for emigrants: no waiting period but penalties apply.
2nd pillar funded pension: the full accumulated market value of your pension fund account, minus applicable taxes (income tax on the capital gains/investment return portion). The government-matching contributions and investment returns are included.
Contact your 2nd pillar pension fund manager (SEB, Swedbank, Citadele, State pension fund VSAA) to initiate the process. Submit documentation of permanent emigration. VSAA processes the 1st pillar records simultaneously.
Early withdrawal of 2nd pillar pension is taxed — income tax (20–31%) applies to the investment return portion. Carefully calculate whether early withdrawal or leaving the capital to accumulate until retirement is more advantageous. For small amounts, the tax may make early withdrawal suboptimal.
International Totalization Agreements
Latvia participates in EU social security coordination (Regulation 883/2004) — all contribution periods in EU/EEA member states are aggregated for pension eligibility purposes. Latvia has bilateral social security agreements with: Ukraine, Belarus, Canada, USA, Australia (under review), Russia (agreement status subject to geopolitical situation), and several other countries. These agreements prevent double contributions and allow contribution periods to be combined for pension eligibility. Check current agreement status at vsaa.gov.lv.
Private Pension Vehicles
2nd Pillar — Mandatory Funded Pension
Valsts fondētā pensija (otrais pensiju līmenis)All Latvian residents born after 1980 (mandatory). Born 1971–1980: voluntary opt-in option (now closed for new participants).
5% of gross salary redirected from the total social insurance contribution (no separate employer top-up beyond this)
Contributions made as part of VSAOI — inherently tax-advantaged (contributions from pre-tax salary)
5% of gross salary (redirected from total VSAOI contributions). From 2025 through 2028, one percentage point was redirected back to the 1st pillar, reducing the 2nd pillar allocation from 6% to 5%. Cannot be increased beyond mandated contribution.
Fund can be managed at various pension fund managers. Can be accessed at retirement age (65). Early access for permanent emigrants with tax penalty.
Choose your fund wisely — active, balanced, and conservative plans available. Active funds have historically outperformed conservative over long horizons. Manage at manapensija.lv.
3rd Pillar — Voluntary Pension Fund
Privātais pensiju fonds (trešais pensiju līmenis)All working residents of Latvia seeking to top up state and mandatory pensions. Especially valuable for those with gaps in state pension accrual.
No direct subsidy
Contributions are deductible from personal income tax (IIN): up to 10% of gross income or €4,000/year (whichever is lower). Significant tax saving at 20–31% income tax rates.
€4,000/year or 10% of gross annual income — whichever is lower — for income tax deduction. Can contribute more but excess not deductible.
Fund assets can be transferred to another 3rd pillar fund. Access at retirement age or after 55 with minimum contribution period. Early access possible but with income tax on entire withdrawal.
Excellent tax efficiency: 20–31% tax deduction on contributions means every €100 contributed effectively costs €69–80 after tax savings. Returns accumulate tax-free until withdrawal. At withdrawal (retirement): taxed as income but at lower rates. Best started as early as possible.
Life insurance savings product
Uzkrājošā dzīvības apdrošināšanaPersons wanting combined life insurance and long-term savings.
None
Tax deductibility possible for qualifying policies within the 10%/€4,000 limit (combined with 3rd pillar pension)
Varies by product
Less portable than pure pension funds. Surrender charges in early years.
Unit-linked life insurance products combine savings with life cover. Be very careful of high management fees and surrender penalties. Generally less efficient than pure 3rd pillar pension funds. Consult an independent financial adviser.
Early Retirement Options
Latvia allows early retirement (agrā pensionēšanās) at 63 (or earlier with special occupations), but with a permanent reduction in pension amount. For each year of early retirement before the standard age, the pension is reduced by a set percentage. Persons with 30+ years of social insurance record can apply for early retirement at 63. Certain professions (some hazardous occupations, military, certain public servants) have lower retirement ages under specific conditions.
Pension Gap Warning
Latvia's average state pension (approximately €400–600/month in 2026) is significantly below the cost of living in Riga, which requires approximately €800–1,200/month for a comfortable basic lifestyle. The pension replacement rate (pension as % of final salary) is relatively low in Latvia's NDC system. Expats who arrive in Latvia later in their working life accumulate fewer Latvian pension rights. This pension gap must be addressed through: 3rd pillar pension savings, property ownership, additional savings, and potentially continued part-time work. The 3rd pillar tax deduction makes early and consistent contributions the most efficient strategy.
Useful Links
Retirement & Pension
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