Template-Type: ReDIF-Paper 1.0
Author-Name: Federica Brenna
Author-X-Name-First: Federica 
Author-X-Name-Last: Brenna
Author-Workplace-Name: Bank of Lithuania
Author-Name: Stefan Girstmair
Author-X-Name-First: Stefan
Author-X-Name-Last: Girstmair
Author-Workplace-Name: Bank of Lithuania
Author-Name: Kasparas Vasiliauskas
Author-X-Name-First: Kasparas
Author-X-Name-Last: Vasiliauskas
Author-Workplace-Name: Bank of Lithuania

Title: Indexation, Reserves, and Crisis Resilience: An Assessment of Lithuania’s Social Insurance Fund
Abstract: This paper assesses reserves of Lithuania’s social insurance fund (Sodra) under demographic ageing and macroeconomic stress, projecting the budget through 2050 under two pension indexation rules: the current law and a seven-year average rule that allows for reserves to be used for pension expenses. The choice between the rules produces a sharp trade-off between reserve accumulation and pension adequacy. Within the seven-year average baseline, investment and fiscal instruments can ease the demographic pressure but cannot resolve it. Under a Global Financial Crisis-style shock, the indexation rule determines the distribution of crisis costs: reserves absorb the shock under one rule, pensioners under the other.

Classification-JEL: H55, J11, J26, G11
Keywords: pension reserves, pay-as-you-go, demographic ageing, replacement rate, crisis resilience

Length:  37 pages
Number: 60
Note:
Creation-date: 2026-06-18
Price: Free
Publication-Status: 
File-URL: https://www.lb.lt/uploads/publications/docs/72833_043d6ebba2edcd66f1d3e1905112115f.pdf
File-Format: Application/PDF
File-Function: Full text
Handle: RePEc:lie:opaper:60