- Funding Programme
- Year
- 2024
Technical Support in transforming the existing fully state-administered funded pension scheme in Lithuania
Lithuania is benefitting from a project financed by the European Commission via the Technical Support Instrument (TSI) to transform the existing fully state-administered funded pension scheme. The project is implemented by the International Labour Organisation (ILO), in cooperation with the European Commission, and with the Lithuanian Ministry of Social Security and Labour. It is to support the preparation of reforms to increase second pillar coverage and improved complementary pension benefits in the long run for the Lithuanian workforce, and better adequacy of retirement income more broadly. The project is to build enhanced capacity with the Lithuanian authorities to assess a transition of the current Mandatory Funded Pension System (MFPS) towards an occupational pension system.
Context
Pension spending in Lithuania is low, and old-age poverty is high. A key challenge is to strengthen pension adequacy through strengthening the 2nd pillar. Recent reforms have been implemented to consolidate its complementary role within the overall pension system. The project is to identify challenges that the 2nd pillar pension scheme faces, and to provide recommendations as to how they can be addressed and its occupational dimension can be strengthened. A 2nd pillar reform was adopted by Lithuania in summer 2025 outside the TSI project, making the elaboration of detailed recommendations by the project obsolete.
Support Delivered
An as-is analysis, and a review of international good practice supported a gap-analysis of the Lithuanian 2nd pillar pension scheme before and after the 2025-reform has been prepared. As requested by the Lithuanian authorities the gap analysis is accompanied by two annexed discussion papers providing a framework for the transition of the Lithuanian 2nd pillar pension scheme in an occupational direction and a framework for improving 2nd pillar governance. Capacity building was supported through missions, workshops, meetings and discussions.
Results achieved
The project has provided a set of comprehensive and concise high-quality reports. They provide a clear assessment of the current situation, and of possible avenues forward. Also, clear indications are provided of the qualities that must be met to achieve adequate and effective 2nd pillar provision and what it will take for Lithuania to move in that direction.
More about the project
You can read the documents related to the project here: