particular, what i have in mind is the need to increase transparency of the first pillar and to strengthen people ’ s confidence in it. these issues will become increasingly important in the future. they will have to be addressed – and the sooner, the better. thus, today, i suggest that we set our gaze slightly beyond the visible horizon. in other words, i propose that in today ’ s discussions, we consider the future of our pension system from the perspective of several decades rather than simply several years. let ’ s take a moment, however, to notice our starting position : the status quo of the lithuanian pension system and its envisaged developments. let ’ s briefly review the bank of lithuania ’ s assessment and several key proposals which might help us take further steps in the direction outlined by the reform. 1 / 4 bis central bankers'speeches colleagues, we face two major problems : poor benefits now and the prospect of even poorer pensions in the future. about the present. the average old - age pension is close to the poverty line. speaking about residents receiving only a sodra pension, the average replacement rate, that is, the ratio between pre - retirement labour income and pension, is only about 35 per cent, whereas the eu average comes close to 50 per cent. approximately one in four senior citizens in lithuania is exposed to the risk of poverty – according to the european commission, once again we are ranked in the bottom three of eu countries. we find ourselves in this – third lowest – position quite often, and we are even starting to come to terms with it. however, there is another important indicator – the ratio between pension expenditure per pensioner and gdp per capita. regrettably, this indicator ranks us in an even lower position. about the future. the international monetary fund estimates that, with no reform of the system undertaken, the average replacement rate for residents who do not independently save for retirement would further decrease and reach only 20 per cent over the coming decades. this means that, in the absence of change, in a couple of decades pensions – calculated at the present monetary value – will be almost one - quarter smaller than they are now. nowadays, there are a number of reasons for poor old - age benefits. one of them is a low level of redistribution through the state budget. last year, the amount of tax revenue in lithuania was below 30 per cent of gdp, while the eu average was almost 40 per cent. by comparison, had we collected the amount of tax

vitas vasiliauskas : lithuania's pension system - how to ensure socially just and sustainable pensions? welcome remarks by mr vitas vasiliauskas, governor of the bank of lithuania, at the economics conference of the bank of lithuania, vilnius, 17 september 2018. * * * dear colleagues, like - minded guests and potential opponents, thank you for joining us at the second economics conference of the bank of lithuania. we are delighted to have you here. when we decided to organise these annual conferences, we set ourselves an ambitious goal : what we seek is not only original insights and interesting discussions ( although i make no secret of the fact that we are hoping for these, too ), but also tangible results. it would not surprise me, then, if new and even unexpected ideas emerged from our sessions. at the same time, we aim to assess experiences tested in real - life conditions. in short, we seek concrete conclusions and proposals for resolving pressing economic problems. it is this urgent need that dictates our choice of topics. accordingly, last year ’ s conference focused on the issues of income inequality. following a thorough discussion and analysis, we concluded that inequality of income and, consequently, of opportunities, stems largely from our tax and pension systems. we agreed that these systems required an immediate and radical overhaul. thus, today ’ s topic – the lithuanian pension system – is a natural continuation of that important discussion. since the ice has at last been broken, however, we can approach this crucial issue from a new angle. the government has undertaken to reform the pension system which, sooner or later, in one way or another, will affect everything and everyone : everyday life as well as national public finances and macroeconomic stability. such an all - encompassing topic warrants particular attention from public institutions, the public and the media. the bank of lithuania took an active part – and will be actively involved in the future – in expert discussions, commensurate with how it perceives its institutional duty. in short, the situation can be summarised as follows : a step in the right direction has been made. however, only a step. the work is far from complete since, first, it is important not only to design solutions but also to implement them qualitatively. and, second, it is already clear that even if we faultlessly follow through with what has been initiated, some elements of the lithuanian pension system will still need to be improved. in