Analytics, Budget, Financial Services, Latvia, Legislation, Pensioners

Ilze Vinkele.

Saeima Social and Employment Matters Committee Chairwoman Aija Barca, Latvian Local Government Union's advisor Silvija Simfa, Riga City Council Welfare Department official Martins Moors, Latvian Merchants Association President Henriks Danusevics, Latvian Pensioners Federation Chairwoman Aina Verze and financial consulting company IBS Prudentia partner Girts Rungainis took part in the discussion, reports LETA.

Vinkele said that a thorough analysis should be carried out to establish which parts of the system were not working as they should. This is when it would become clear that several political decisions have deformed the system, which initially was correct, said the minister.

The first mistake is the fourth pension pillar that was never introduced in Latvia, where money from privatization of companies would have to be transferred. "We all know the sad story of Latvijas Kugnieciba, and we know how a certain city by the sea influenced distribution of the shipping company's profit, and what this did to the welfare budget," said Vinkele. "The money was being pumped out and into to offshore companies, not a single santim went to the budget," she added.

The other problem is the decision that maternity benefits have to be paid from the social budget, although they are not covered by social insurance contributions, and there is no money for such benefits in the social budget.

The third problem is pension supplements, which were not planned in the original pension system.

These three problems came as a result of flawed political decisions, and they have a major impact on the welfare budget. But it would not be right to revamp the system until all these problems are discussed with the public, said Vinkele.