Approved budget of 2021: child money, pensions, allowances and the minimum wage will increase

Budgets of the state, municipalities and Sodra have already been approved, so it is clear how we will live in 2021. Next year, child money, retirement pensions, pensions for incapacity for work and other pensions, and the minimum wage will grow; in addition to first-graders, second-graders will also receive free meals in schools as from September, and the basic official salary will increase.

“Consistent growth in retirement pensions, pensions for incapacity for work and other pensions, child money and a higher minimum monthly wage will help most disadvantaged people of the country. I would like to emphasize that the totality of decisions urgent in the face of the current Covid-19 situation which sped up the approval of the budget of 2021 did not leave the issue of pensions to single persons aside. The agenda of the spring session of the Seimas will include a project providing for pensions to single persons not only to widows, but also to all single persons," says Monika Navickienė, the Minister of Social Security and Labour.

Changes in social benefits and support to families who have children 

CHILD MONEY.Next year, child money will increase from EUR 60 to EUR 70. Children with disabilities, also children from large or low-income families will get a premium of EUR 41, thus child money for children with disabilities and children from large or low-income families will reach EUR 111 per month.

There are about 518 000 children receiving child money in Lithuania, of which about 144 000 children get the premium.

Child money is paid to all children from birth till they reach 18 or 21 years of age, children, who are enrolled in a general education programme, including those studying in vocational training institutions where education includes a general education programme.

Large families are families which raise or foster 3 or more children. Low-income families are families whose income is below EUR 256 per family member, exclusive of child money and a part of salary and unemployment social insurance benefit.

ALLOWANCE FOR CARE OF CHILDREN OF PUPILS OR STUDENTS.Effective next year, this allowance will be paid regardless of the age of pupils or students. When one of the parents, adoptive parents or guardians, who does not have accumulated the social insurance length necessary to receive a child care allowance from Sodra because of learning or studying, they shall receive an allowance for care of children of pupils or students. A monthly allowance of EUR 240 shall be paid from the date of birth of the child till the child turns 2 years old.

FREE MEALS. Effective September next year, not only children from low-income families, pre-schoolers and first-graders, but also all second-graders will receive free meals in education institutions.

There are almost 350 000 pupils in the country this school year. About 100 000 pupils are entitled to free meals – these are pre-schoolers, first-graders and older pupils from low-income families. Having introduced free meals to second-graders, almost 126 000 students will receive free lunch in education institutions.

Changes in pensions to seniors and people with disabilities

PENSIONS. In 2021, social insurance pensions will grow by 9.58%. Not only retirement, but also early pensions, pensions for lost working capacity (disability) and widow and orphan pensions will increase by this percentage rate.

According to estimates, the average retirement pension with the necessary length of service will be EUR 440 and the average pension will reach EUR 415 in 2021. Currently, the average retirement pension with the necessary length of service is EUR 400 and the average pension is EUR 377.

Those, who receive the smallest pensions when the sum of all pensions received, except for social assistance pensions, does not reach the level of the minimum consumption needs, have been paid pension premiums, which will total EUR 260 in 2021 (currently – EUR 257). Persons are entitled to a specific premium based on the length of service accumulated during their life. The total amount of all pensions received by a pension recipient with the necessary length of service may not be less than the minimum consumption needs. Persons with shorter length of service are paid a smaller pension premium, respectively.

Next year, state pensions will increase by 1.2% and the state pension base will reach EUR 58.70. Officers, soldiers and judges will also receive higher state pensions.

There are about 615 000 people receiving retirement pensions, 160 000 recipients of pensions of lost working capacity, almost 98 000 recipients of state pensions, 30 000 recipients of orphan pensions, 60 000 recipients of social assistance allowances, and about 5 000 recipients of early retirement pensions.

Changes that working people will face

MINIMUM WAGE. In 2021, the minimum wage paid for unskilled work only will increase from 607 to 642 euros, gross. Net wage will increase from 447 to 467 euros, if a person does not accumulate for future in the second pillar pension funds.

There are about 130 000 recipients of minimum or lower wage in Lithuania and approximately 1.27 million people covered under all types of social insurance.

SALARY. Next year, salaries of civil servants, officers, employees of state and municipal budgetary institutions, politicians, judges and soldiers will also increase, as the basic official salary will grow from 176 to 177 euros.

Minimum wage coefficients will also increase for the lowest earning A, B and C level budgetary sector employees. 

The fixed component of the official salary is calculated by multiplying the basic amount of the official salary by the coefficient applied to a specific position. A variable component, which depends on the achievement of work goals, also premiums, bonuses or wages for work on days-off and public holidays, work at night and overtime, if worked, is usually added to the official salary.

The increase in the basic amount of the official salary will affect about 200 000 public sector civil servants, employees, officers, judges and soldiers.

Salaries of employees in the field of social services will increase next year. Effective 1 July, the minimum coefficients of the fixed component of the official salary will be increased by 30 %, instead of the current 20 %; social workers will also earn more for their qualification category held. 

Other benefits

During annual approval of state and municipal budgets, reference indicators of social assistance benefits, which are the basis for paying benefits to residents or their right to social assistance, also change. 

The base social benefit will be EUR 40, the social assistance pension base – EUR 143, and the target compensation base – EUR 120 next year. State-supported income will reach EUR 128 and the minimum consumption needs will be EUR 260.

Tax and contribution rates will not change

There are no plans to change any tax or social insurance contribution rates next year for those working under employment contracts or self-employed. Amounts of contributions and benefits related to minimum monthly wage will change.

Social insurance contributions for persons insured from state funds, the “floor” of Sodra contributions, when the calculated salary is lower than the minimum wage, and the monthly compulsory health insurance contribution depend on the minimum monthly wage.

Social insurance contributions of business license holders and farmers who do not declare income from individual agricultural activities and their partners are also linked to minimum wages.

As from the beginning of February of the following year, self-employed persons will be entitled to sickness, vocational rehabilitation, maternity, paternity or childcare benefits only if they have paid social insurance contributions for the last calendar month before the onset of a disease, vocational rehabilitation or maternity.
Unemployment social insurance benefits also increase with increasing minimum monthly wage.

The "ceiling" of social insurance contributions will decrease next year. If currently social insurance contributions are no longer paid if the person's annual salary exceeds the limit of 84 average monthly salaries, contributions will no longer have to be paid having crossed the limit of 60 average monthly salaries. People will be subject to the provision regarding the contribution "ceiling" regardless of how many jobs they have.

Last updated: 29-12-2020

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