Lithuania’s pension system faces demographic crunch as two workers now support each retiree

Key facts

• Currently, two insured workers support one old-age pensioner in Lithuania.
• The average old-age pension in 2026 is projected to reach €750, or €810 with the required service record.
• In 2025, the actual average old-age pension with required service was €718.73, equivalent to 45.3% of net average wage.
• The poverty risk rate for people aged 65+ was 39.5% in 2022, and remains above 25%.
• In 2024, 25.8% of Lithuania's population was at risk of poverty or social exclusion, one of the highest rates in the EU.
• The minimum consumption needs threshold for 2026 is €468, below which pension supplements are triggered.

A system under strain

Lithuania’s state social insurance fund, Sodra, currently relies on two insured workers to finance each old-age pensioner, but that ratio is expected to deteriorate as the workforce shrinks and the number of retirees grows. The country’s falling birth rate and aging population are placing mounting pressure on the pay-as-you-go pension system, raising questions about its long-term viability. “The system is sustainable and stable,” said Malgožata Kozič, a Sodra representative, noting that the pension insurance result has been positive every year, with contributions exceeding payouts. However, demographic trends suggest that this balance may become harder to maintain. Economists warn that there are no easy solutions, and some residents express deep unease about their future security.

Current pension levels: growth but not comfort

Pensions in Lithuania have risen noticeably in recent years, but the increases have not translated into a comfortable retirement for most seniors. According to the Ministry of Social Security and Labour, the average old-age pension in 2026 will rise by about €80 to €750, while the average for those with the required service record will increase by roughly €90 to €810. Yet these figures mask significant variation. In 2025, the actual average old-age pension with required service stood at €718.73, which represented only 45.3% of the net average wage. Even after recent growth, the typical pension remains below half of what a worker takes home, leaving many retirees with little financial breathing room.

The gap between average and adequacy

The official minimum consumption needs threshold for 2026 is set at €468, a level that the average pension comfortably exceeds. But this benchmark is not a standard for a dignified life; it is a basic poverty line used to determine eligibility for pension supplements. Real-life expenses for seniors often include higher medical costs, transportation, and recurring small outlays that can stretch a modest income. For retirees who own their home, have no major health issues, and live with others, the situation is often manageable. But for those living alone, facing high heating bills or frequent doctor visits, even €700 or €800 can feel tight. The gap between a statistical average and lived experience is wide.

Poverty persists among the elderly

The poverty risk rate for people aged 65 and over was 39.5% in 2022, a stark indicator that many pensioners are struggling. The Ministry of Social Security and Labour acknowledges that the poverty risk for this age group remains above 25%, which is why it has tied additional indexation of the individual part of pensions to this metric. At the national level, 25.8% of Lithuania’s population was at risk of poverty or social exclusion in 2024.— one of the highest rates in the European Union. While this figure covers all age groups, it underscores the fragility of financial security in the country, particularly for its most vulnerable citizens.

Demographic headwinds and public anxiety

Lithuania’s birth rate is declining and the population is aging, trends that will reduce the number of contributors to the pension system. Some residents blame younger generations for not having enough children, while experts argue that only immigration can alleviate the looming shortfall. Public anxiety is palpable: when asked whether they feel calm about receiving a pension in old age, one woman sighed, “I just hadn’t thought about it,” while a man said, “I think it’s calm for me, but looking further ahead, it won’t be.” Another resident advocated for diversification: “You need to think about various ways, diversify everything, from different incomes, so that you can receive something in old age.” The sense of uncertainty is widespread, even as Sodra insists the system remains stable for now.

Outlook: no easy fixes

Economists caution that there are no simple solutions to the pension challenge. The current ratio of two workers per pensioner is already tight, and as the workforce shrinks, the burden on each contributor will grow. Some see immigration as the only viable option to sustain the system, while others call for structural reforms to encourage higher birth rates or later retirement. For now, the government continues to index pensions and provide supplements to those below the minimum consumption threshold. But with the poverty risk among seniors still high and demographic pressures mounting, the debate over how to secure retirement income for future generations is only just beginning.

The bottom line

• Lithuania’s pension system currently has two workers supporting each retiree, a ratio that is expected to worsen as the population ages.
• Average pensions are rising but remain below half of the net average wage, leaving many retirees with limited financial security.
• Poverty risk among those aged 65+ was 39.5% in 2022, and the overall population poverty/exclusion rate is among the highest in the EU.
• Demographic trends — low birth rates and an aging population — threaten the long-term sustainability of the pay-as-you-go system.
• Public confidence in future pensions is low, with many residents expressing anxiety about their old-age income.
• Economists and officials acknowledge that no easy solutions exist, with immigration and structural reforms seen as potential but contentious options.