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 are not allowed to withdraw funds before reaching pension age.

Pension scheme eligibility: Employed persons under 40 years of age, and all persons who are currently taking part in the pension scheme, will be included in the new scheme and will have the opportunity to opt out.

Life cycle funds: Pension accumulation companies will be obligated to offer participants to join pensions funds that are most appropriate to them in terms of age. This means that managers will be obligated to strive towards maximum return on investment when participants are of young age 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 annuity are the two types, and the mandatory annuity purchase limit has been reduced to €10,000. This means that an annuity should be purchased only after accumulating a sum of no less than €10,000.

• If the accumulated sum is equivalent to, or less than, €5,000, the respective person will be provided with a single payment. This money shall be heritable.
• If the accumulated sum is between €5,001 and €10,000, the respective person will be provided with periodic payments (which shall be terminated once all the money has been used up). This money shall also be heritable.
• If the wealth accumulated in the pension fund exceeds €60,000, 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 who have 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 2020, the period of contribution is 31 years and 6 months.

Maternity Benefits

Expectant mothers are entitled to receive:

• 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 the period of 24 months before the child reaches 2 years of age.

Amount of benefits: The maternity benefit is 77.58 % of the compensated recipient’s wages. This size is calculated according to the person’s insurable income received for 12 consecutive calendar months until the calendar 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. €234 euros (6x€39).

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 childbirth.
• For 70 calendar days after the childbirth in the case of complicated childbirth, 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 77.58% of the compensated recipient’s wages. This size is calculated according to the personal insurable income received in 12 consecutive calendar months until the calendar month preceding the month when the right to paternity benefits appeared. The paternity benefit is paid for the period of 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) – 77.58% replacement wage
• 2 years childcare leave (until the child reaches 2 years of age) – first year 54.31% replacement wage, second year 31.03% replacement wage

Employment Insurance

Employment insurance benefits entitle recipients to income replacement due to:

• 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. 62.06% of the recipient’s compensated wages shall be paid by the National Social Insurance Fund from the 3^rd day of illness. The monthly sick pay paid by the National Social Insurance Fund cannot be smaller than 11.64% of 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 (disability below 30%). 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 will typically offer a free annual check-up, 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 are increasingly using flexible benefits to improve retention, boost morale, reduce sickness and absence, improve productivity, and job performance. Young employees are looking for flexible employee benefits and an employer that cares about their health and wellbeing.

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 in order to reimburse for these services through health insurance (a common practice), additional taxes would apply.

Perks

Employee Wellbeing

These perks are usually offered by foreign companies and include the employer modifying the workplace to encourage healthy behaviors, installed 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.