The study finds that Latvia is heading into sustained population ageing and a much smaller workforce by 2060, with the total population projected to fall from 1.86 million in 2025 to about 1.34 million under the baseline scenario, while the ratio of working-age people to retirees drops from 2.88 to roughly 1.52.

Longer life expectancy, persistently low fertility, and only limited relief from migration mean that the pay-as-you-go first pension pillar will come under growing strain: if contribution rates stay unchanged, its theoretical replacement rate could fall to around 35% by 2060.

The paper notes that pensions have so far remained relatively stable compared with wages, and pension spending has stayed around 7–8% of GDP, but this has been due to policy choices rather than favourable demographics.

A stronger funded second pillar could partly offset the decline, with illustrative estimates suggesting that a 5% contribution could add about 20% to the replacement rate, though this brings higher savings demands and more exposure to market risk.

The overall conclusion is that no single fix, whether higher fertility, more migration, or more funding through the second pillar, will be enough on its own; Latvia will need a mix of gradual pension reform, stronger labour force participation, and economic growth to keep pensions both sustainable and adequate.

Download the full report below (in English).