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SODRA’s budget for 2022 approved: revenues will exceed expenses and funding for pensions increased

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2021 12 14

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SODRA’s budget for 2022 approved: revenues will exceed expenses and funding for pensions increased
SODRA’s budget for 2022 approved: revenues will exceed expenses and funding for pensions increased

The Seimas (Parliament of the Republic of Lithuania) approved the draft budget of the State Social Security Fund Board (SODRA) for 2022. The budget revenues will exceed expenses by EUR 303.1 million, with the reserve totalling EUR 1,061,000,000. Expenses for social security pensions will account for the largest part of the budget expenditure (EUR 4,251,500,000), which is a 12% increase compared with 2021. 
‘We estimate that next year revenues of the SODRA’s budget will exceed expenditure, and the reserve will amount to over one billion euros. Expenses of the SODRA’s budget will decrease due to the pandemic and unemployment, with the largest amount of money spent for social security pensions with the aim to reduce poverty and social seclusion of older people’, says Monika Navickienė, Minister of Social Security and Labour.

SODRA’s revenues will exceed expenditure 

According to projections, in 2022 revenues of the SODRA‘s budget will be EUR 5,836,600,000, which is 8.6% or EUR 461.3 million more than the expected result of 2021. The increase in revenues is mainly driven by the projected 9% growth in the wage fund.   
It is estimated that expenditure of SODRA‘s budget will be EUR 5,533,500,000 in 2022 (9.5% or EUR 478.9 million more than the expected result of 2021). The expenditure will grow mainly due to the increase in social security benefits resulting from the 8% growth in the wages and amendments to the Law on Social Insurance Pensions.  
In 2022, SODRA’S current year revenues will exceed the expenses by EUR 303.1 million. It is expected that in 2022, EUR 279.2 million will be transferred to the reserve fund (based on the positive cash flow result for  2021), and the reserve fund will amount to EUR  1,061,000,000.

Increased funding for pensions

Next year, expenses for social insurance pensions will account for the largest share of SODRA’S expenditure. EUR 4,251,500,000 will be allocated for this purpose, which is 11.9% or EUR 453.8 million more than the expected result for 2021. This increase is driven by the projected pension rise based on the pension indexation coefficient for 2022 and proposed amendments to the Law on Social Insurance Pensions, which provide for additional indexation of the individual part of pensions and for payment of the full base pension for those who do not have the necessary service record.
The average old-age pension for persons with the necessary service record would increase from EUR 441 in 2021 to EUR 489 in 2022, i. E. 10.9% or EUR 48. The share of the average old-age pension (with the necessary service record) as a percentage share of the net wages in Lithuania will increase from 44.6% in  2021 to 46.1% in 2022.
Allocations from the state budget to the general part of pensions considering the proposed amendments to the Law on Social Insurance Pensions will total  EUR 2,367,600,000, i. e. 11.5% or EUR 222.7 million more than the expected result for 2021.

Reduction of SODRA‘s costs in relation to the pandemics and unemployment

According to projections, as prevalence of Covid-19 infections should decrease next year, expenses for sickness social insurance will amount to EUR 427.1 million, i. e. will be 2.6% lower than in 2021 (reduction by EUR 10.7 million).
It is estimated that EUR 282.4 million will be allotted for unemployment social insurance in 2022, and relevant expenses will be 2.2% or EUR 6.4 million lower than the expected result for 2021 as the unemployment rate should decrease from 7.4% in 2021 to 6.7% in 2022. 
Expenses for maternity social insurance benefits will total EUR 414.9 million (by EUR 38.7 million or 10.3% more than in 2021); expenses for social insurance for accidents at work and occupational diseases will amount to EUR 33.2 million, which is an increase of 9.6% or EUR 2.9 million than the expected result for 2021.