In 2026, important Lithuanian pension accumulation system changes will come into force – these changes are crucial to understand for everyone who is already saving or is considering saving in second-pillar pension funds. In this article, we share the most important information about these changes, based on data provided by the Bank of Lithuania and other institutions.
Unlike the first pillar pensions, which cannot be inherited, the funds accumulated in second- and third-pillar pension funds belong to you and are inheritable. The exact inheritable amount depends on how much has been accumulated and on the chosen payout method, i.e. a standard or deferred annuity. If a deferred annuity is chosen, the majority of the accumulated funds (85–90%) may be inherited.
Saving in second-pillar pension funds helps protect your money against inflation. It is also important that by investing regularly, as markets rise, more and more funds accumulate and earn returns, so the accumulated amount grows not only from contributions but also from earned interest.
How will automatic enrolment into the second-pillar saving system change?
From 1 January 2026, automatic enrolment into second-pillar pension saving will be abolished. This means that no one will be enrolled automatically – each person will decide independently whether to save or not by consciously choosing a pension accumulation company and signing a pension accumulation agreement. Residents who were automatically enrolled in 2025 may still decide to withdraw from second-pillar pension saving until 31 December 2025.
When will it be possible to withdraw from second-pillar pension funds?
Withdrawal from second-pillar pension funds will be possible from the beginning of 2026 until the end of 2027. In exceptional cases, such as serious illness, a small accumulated amount before reaching retirement age, etc., withdrawal will also be possible outside this “window” period.
From 1 January 2026 to 31 December 2027, it will be possible to terminate participation, withdraw your own contributions together with investment returns, and receive additional “Sodra” pension accounting units for the amounts contributed by the state and “Sodra”.
What will the pension benefit be?
Upon reaching retirement age, the funds accumulated in a second-pillar pension fund may be withdrawn as:
a lump-sum payment,
periodic payments, or
by purchasing a pension annuity (standard or deferred).
The withdrawal method depends on the total accumulated amount.
If the accumulated assets do not reach EUR 14,721.44, you may choose between an annuity, periodic payments, or a lump-sum payment.
If the accumulated assets are between EUR 14,721.44 and EUR 73,607.21, a pension annuity is mandatory.
If the accumulated assets exceed EUR 73,607.21, you must purchase a pension annuity, and the portion exceeding the upper annuity limit may be withdrawn as a lump-sum payment from the pension accumulation company.
Lump-sum and periodic payments are paid by pension accumulation companies, while annuities are paid by “Sodra”.
What is the difference between pension annuities?
A pension annuity is a monthly pension benefit paid to a pension fund participant for life. “Sodra” guarantees that the monthly payment will not decrease throughout the payment period.
A standard pension annuity is paid periodically for life. Payments stop upon the death of the recipient. It is purchased using the entire amount of pension assets accumulated in the participant’s name.
A standard pension annuity with a guaranteed payment period is also paid periodically for life. Payments stop upon the death of the annuity recipient. This annuity is purchased using the entire accumulated pension assets of the participant.
In the case of a deferred pension annuity, the participant’s assets are divided into two parts. One part is used to pay periodic payments from the pension fund until the participant reaches the age of 85. The second part is used for the deferred annuity: once the recipient reaches 85, “Sodra” pays a pension annuity periodically for life. Payments stop upon the death of the annuity recipient.
What is the difference between pension payouts?
If the accumulated amount in the second-pillar pension fund is below the mandatory annuity threshold set by “Sodra”, the pension accumulation company may pay this amount as a lump-sum payment.
If the accumulated amount is below the lower annuity threshold calculated and published by “Sodra”, the person may choose to receive periodic payments paid by the pension accumulation company until the recipient reaches 85 years of age. The amount of periodic payments is calculated not in euros, but in pension fund units, the value of which depends on changes in the value of shares, bonds, or other securities in which the pension fund assets are invested. These payments are made periodically and at least once every three months, meaning they may be paid monthly, every two months, or every three months until the pension fund participant reaches the age of 85.
What happens if a pension fund goes bankrupt?
The assets of a pension fund are separated from the company that manages it. Even if the fund manager goes bankrupt, your money continues to be invested in the fund and is managed by a new company. Pension fund assets are held in a special bank (a depository), and the activities of pension funds are supervised by the Bank of Lithuania.
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