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People’s income in 2023: higher salaries, bigger pensions for seniors, increase in other benefits

Date

2022 11 28

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People’s income in 2023: higher salaries, bigger pensions for seniors, increase in other benefits

After the Seimas’ approval of the draft budgets of the state and municipalities, also of Sodra, in the field of social security and labour it is important to know that in 2023 there will be an increase in the old-age pensions, work-incapacity, widows’ / widowers’ and orphans’ pensions, target compensations for the disabled, single person benefit, additional supplements to small pensions, the minimum wages will grow significantly, the base rate of official salary, the work pay for staff of budgetary institutions will increase, too. 

“Even in the situation of economic uncertainty and limited state financial resources, we are increasing the population’s income next year. Pensions will continue to grow steadily, the single person benefit, target compensations for the disabled and other social benefits will increase, the income of the country’s population earning the minimum wages and salaries of employees of the public sector institutions will grow,” says the Minister of Social Security and Labour Monika Navickienė.  

Working people will earn more 

MINIMUM MONTHLY WAGE. From the beginning of 2023, the minimum monthly wage (MMW) increases to EUR 840, i.e. by 15% up from the current EUR 730.  

The last time the MMW increased most was at the beginning of this year when it increased by EUR 88 before tax, which is by 13.7%.  

The minimum hourly wage increases up to EUR 5.14 at the start of 2023 up from the current EUR 4.47. The minimum hourly wage increases by EUR 0.67, which is also about 15%. 

The increase in the minimum wage will require EUR 37.6 million from the state budget. 

TAX-EXEMPT AMOUNT OF INCOME. In order to increase the income of people who earn the least and their incentives to work, the tax-exempt amount of income (TEAI) is also increased – to EUR 625. Next year, the TEAI will increase by 15.7%. The TEAI growing more than the MMW, the after-tax income of people earning the minimum wage will grow by EUR 83 next year due to the increase of the MMW and the TEAI. 

The tax-exempt amount of income for people with reduced working capacity will increase accordingly. The monthly TEAI for persons with a 0–25% working capacity will amount to EUR 1,005 and for persons with a 30–55% working capacity – to EUR 935. 
 
The Labour Code provides that the MMW can be paid only for unskilled work. The MMW increase will affect about 130,000 workers or on average about 26,000 people in the country working full-time. According to Sodra’s data for September 2022, the number of such employees in budgetary institutions was about 18,000. 

SALARIES IN BUDGETARY INSTITUTIONS.  Next year, the base rate of official salary increases by EUR 5 from EUR 181 to 186. The change in the base rate of official salary will affect the salaries of civil servants, employees of budgetary institutions, public officials, servicemen, and judges – more than 200,000 people working in the public sector. In 2022, the base rate of official salary increased by EUR 4. 

About EUR 118 million will be required from the state budget to increase the base rate by EUR 5. 

It is planned to increase the minimum coefficients for job positions of levels A, B and C from 10% to 12%. The increase of the fixed part of the official salary by a coefficient of about 0.5 will affect more than 25,000 employees. Their work pay will increase by EUR 98–158.  

EUR 30 million will be allocated for the increase of coefficients in budgetary institutions. 

In 2023, the fixed part of the official salary of these employees, also due to the base rate increases up to EUR 186, would increase from EUR 120.6 to 122 for employees of levels A and B, from EUR 97.9 to 99.4 for employees of level C, from EUR 142.6 to 150.6 for heads and deputy heads of administrative units, from EUR 153.6 to 158.1 for heads and deputy heads of institutions. 

Higher income for pensioners and the disabled

PENSIONS. The average old-age pension will increase from EUR 482 to EUR 542 next year. The average old-age pension with the minimum social insurance record will increase from EUR 510 to 575 in 2023.   

The general part of the pension will increase by about 9% in 2023 and the individual part – by almost 15%. From January of the following year, the average pension with the minimum social insurance record will increase on average by more than 12% or EUR 65. 

This year, pensions were increased twice: in January, on average, by 12%, and in July – by 5% more. Overall, the pension growth in 2022 has been by 16–17%. 

 State pensions of officers, servicemen, and judges will be indexed by 4.6% from 1 January 2023. 

It is estimated that about EUR 520 million will be required next year for the increase in pensions.


 
SINGLE PERSON BENEFIT. Next year, equally as this year, a single person benefit will be granted automatically and paid without a separate request from the relevant person. It is estimated that from the beginning of next year, a single person benefit of almost EUR 35 will be due to about 240,000 single people with disabilities and people of retirement age. 
About EUR 101 million will be allocated for single person benefits in 2023.  

ADDITIONAL SUPPLEMENTS TO PENSIONS. With regard to the forecast minimum consumption needs of EUR 354, next year there will be an increase in additional supplements to small pensions. The average amount of the additional supplement will be EUR 31.17. 
EUR 27.6 million will be allocated for additional supplements to small pensions.  

Bigger social benefits 

Base rates of social benefits will increase at the beginning of 2023. It is planned that next year the basic social benefit will be EUR 49, the base for benefit pensions will be EUR 184, the base for target compensations will be EUR 147, and the amount of state-supported income will be EUR 157. 

BASE RATE OF BENEFIT PENSIONS. It is intended to increase the base for benefit pensions to EUR 184 starting from January next year. Benefit pensions for persons who reached the retirement age will increase to the same amount. 
  
Benefit payments, depending on the type of benefit and the category of recipients, will increase from EUR 5.5 (benefit orphan’s pension) to EUR 24.75 (benefit disability pension for persons who lost 100% of working capacity before 24 years of age).  

Benefit payments ensure a minimum income for people with no or very low income in cases of disability or old age.  
 
It will affect about 60,000 recipients of benefit pensions: orphans, disabled children, adults with disabilities from childhood, other people with disabilities and people of retirement age, who do not have the minimum social insurance record entitling to a social insurance pension.  

BASE FOR TARGET COMPENSATIONS. From the beginning of 2023, it is planned to increase the base for target compensations from EUR 138 to 147. Last year, it was EUR 120. Upon increase of the base rate for target compensations, the target compensation for people with first-level special permanent nursing needs would increase by EUR 23.4 and for people with second-level special permanent nursing needs would increase by EUR 17.1. 
 
The target compensation for people with first-level special permanent care (assistance) needs would increase by EUR 9.9 and for people with second-level special permanent care (assistance) needs would increase by EUR 5.6.  

About 91,000 people receive such compensation in the country.  

AMOUNT OF STATE-SUPPORTED INCOME.  After the amount of state-supported income increases by EUR 10 from the start of the next year, it will amount to EUR 157. It is forecast that the average monthly amount of social benefit per person will increase from EUR 124.4 to 133 next year.  
 
The amount of state-supported income is relevant in establishing entitlement to social assistance in cash for low-income persons, entitlement to social assistance for pupils, additional child benefit, assistance for the purchase or rental of housing and other social assistance.  

BASIC SOCIAL BENEFIT.  The basic social benefit is planned to be EUR 49 in 2023. The increase in this amount will lead to an increase in the amounts of benefits that depend on it: all benefits under the Law on Benefits for Children, for example, child money, one-off benefit in case of childbirth, one-off benefit for a pregnant woman, guardianship (care) benefit, target supplement to guardianship (care) benefit, one-off settlement benefit, child care benefit for a pupil or student.  

For example, a one-off benefit in case of childbirth will increase from EUR 506 to 539 in 2023. The child money will increase to EUR 85.75 and for large families with low income or families with a disabled child, the child benefit will increase to EUR 136.22.