Latvian economists Oļegs Tkačevs and Ludmila Fadejeva have highlighted the need to expand access to the third level of pension system participation and to improve mechanisms that incentivize savings among the wider population. They suggest that both tax relief measures and accessible participation options are crucial for boosting long-term savings. The call comes as participation in private pension funds and life insurance has seen significant growth in Latvia over the past fifteen years, with 2023 marking a notable increase in contributions by nearly four times compared to 2010.

The study conducted by the economists revealed a substantial increase in participant numbers in the third-tier pension system and life insurance products, particularly between 2013 and 2018. This surge was noted just prior to significant income tax reforms implemented in 2018, which made several critical changes to the benefits structure for taxpayers. These reforms, while intended to improve the tax system, also imposed limitations on the refund eligibility for income tax related to pension contributions, potentially influencing future participation rates and savings behavior among the population.

Overall, addressing the accessibility of pension savings and the associated tax implications is crucial for fostering a culture of saving and financial preparedness among the Latvian populace. The recommendations of the economists aim to ensure that the retirement system remains robust and beneficial for a larger segment of society, ultimately supporting sustainable economic growth and stability in the region.