Lithuania

Mandatory employee benefits in Lithuania include a three-tiered pension system, maternity leave and benefits, and employment insurance. Supplementary employee benefits include health insurance, retirement, and flexible benefits. Perks are not common in the country.

Mandatory Employee Benefits in Lithuania

Pension

The Lithuanian pension scheme became operational in 2004, allowing residents to accumulate a part of their social insurance contributions in private pension funds.

The pension system in Lithuania is made up of three Pillars in which pensions are accumulated differently.

Pillar I

This is the state’s social security system through which individuals are insured or insure themselves for a social insurance pension.

Pillar II

New sources of financing were introduced in 2019: a person’s private contribution (3% of the person’s gross wage) and the state’s contribution (1.5% of the national average wage).

Once a pension fund scheme has been set up, people cannot withdraw funds before reaching pension age.

Pension scheme eligibility: Employed persons under 40 years of age and all persons currently taking part in the pension scheme will be included in the new scheme and can opt-out.

Life cycle funds: Pension accumulation companies will be obligated to offer participants to join pension funds that are most appropriate to them regarding age. This means managers will be compelled to get maximum return on investment when participants are young and work towards securing the wealth accrued over a lifetime once they start nearing retirement age.

Annuity: As of July 1, 2020, the State Social Insurance Fund became the centralized provider of annuity services. Deferred and standard annuities are the two types, and the mandatory annuity purchase limit has been reduced to €10,000. This means an annuity should be purchased only after accumulating no less than €10,000.

• If the accumulated sum is equivalent to, or less than, €5,403, the respective person will receive a single payment. This money shall be heritable.
• If the accumulated sum is between €5,403.01 and €10,806.99, the respective person will receive periodic payments (which shall be terminated once all the money has been used). This money shall also be heritable.
• If the wealth accumulated in the pension fund exceeds €6,4841, the respective person shall have the right to receive the excess amount from the pension accumulation company as a single payment.
• The standard pension annuity allows pension benefits to be paid to the person to commence immediately and last for life. The standard pension annuity is not.

Pillar III

This comprises voluntary contributions to a pension fund or participation in a life insurance scheme. Everybody can participate, including those who do not make pay contributions to SoDra (Pillar III) and who do not participate in Pillars I and II.

The following people have the right to receive a pension from SoDra:

• Those who have reached retirement age. The pension age is currently being increased year by year to 65.
• Those with at least the minimum social insurance pension record of 15 years. The number of years of contributions to draw the full pension has been gradually increasing since 2018 by 6 months every year until it will reach 35 years in 2027. In 2022, the period of contribution was 32 years and 5 months.

Maternity Benefits

Expectant mothers are entitled to receive the following:

• Before the first day of the pregnancy and childbirth leave — maternity social insurance record of not less than 12 months during the last 24 months. ​
• If a person has the obligatory social insurance record because they had been on childcare leave before – the maternity social insurance period is calculated from 24 months before the child reaches 2 years of age.

Amount of benefits: The maternity benefit is 78% of the compensated recipient’s wages. This size is calculated according to the person’s insurable income for 12 consecutive calendar months until the month preceding the month when the right to maternity benefits appeared.

The minimal monthly maternity benefit cannot be smaller than 6 basic social insurance benefits valid for the last quarter before the right to maternity benefit appeared, i.e., €276).

The benefit is paid:

• For 126 calendar days after 30 or more weeks of pregnancy.
• In the case of complicated childbirth, and if more than one child was born, the benefit shall be paid for extra 14 calendar days.
• For 56 calendar days after the childbirth, if a woman has not used the right to a pregnancy and childbirth leave before the date of birth.
• For 70 calendar days after childbirth in the case of a complicated delivery, or if more than one child was born, and a woman has not used the right to a pregnancy and childbirth leave before the date of childbirth.

The paternity benefit is 78% of the compensated recipient’s wages. This size is calculated according to the personal insurable income received in 12 consecutive calendar months until the month preceding when the right to paternity benefits appeared. The paternity benefit is paid for 30 calendar days and can be used until the child becomes 3 months old.

Childcare benefit:  A mother or a father can be on childcare leave for 1 or 2 years. Depending on the term, different benefit levels apply:

• 1 year of childcare leave (until the child reaches age 1) – 78% replacement wage
• 2 years childcare leave (until the child reaches 2 years of age) – first year 45% replacement wage, second year 30% replacement wage

Employment Insurance

Employment insurance benefits entitle recipients to income replacement due to the following:

• Sickness: The employer pays a minimum benefit of 62.06% and up to 100% (discretionary) of the recipient’s average wages for the first 2 days of illness. The National Social Insurance Fund, from the 3rd day of illness, shall pay 62.06% of the recipient’s compensated wages. The monthly sick pay paid by the National Social Insurance Fund cannot be smaller than 11.64% of the domestic average monthly wages valid for the last quarter before the temporary working inability was determined.
• Disability allowances: Statutory benefits are paid when a person has lost the capacity to work continuously (paid as a fraction when capacity is lower than 45%). The benefit is paid as a multiple of the Lithuanian Insured Income (€476/month) or a fraction based on the amount of incapacitation.
• Maternity
• Parental leave
• Pension

Supplementary Employee Benefits

Healthcare

The most popular supplementary employee benefit in Lithuania is voluntary Health insurance. Supplemental plans typically offer free annual check-ups, dental care, and vision aids.

Retirement

See Pillar III under the pension section in mandatory benefits.

Education

Companies can provide or assist with employee development, usually bearing all training or education costs.

Flexible Benefits

For the last three to five years, employers have increasingly used flexible benefits to improve retention, boost morale, reduce sickness and absence, and improve productivity and job performance. Young employees seek flexible employee benefits and an employer that cares about their health and well-being.

Gymnasiums

Very large local employers or foreign branches can provide ‘gym on site’ facilities. Smaller employers may offer gym subsidies. However, sports clubs/gymnasium perks are included in taxable services, and additional taxes would apply to reimburse for these services through health insurance (a common practice).

Perks

Employee Well-being

Foreign companies usually offer these perks and include the employer modifying the workplace to encourage healthy behaviors and installing playrooms and lounges.

Related Government Websites

• Ministry of Social Security and Labor
• State Social Insurance Fund Board

This information about employee benefits in Lithuania is provided by MAA CEE, Asinta’s employee benefits consulting Partner in Lithuania.