Key Changes in Pension Accumulation from 2026
No More Automatic Enrollment
Until now, "Sodra" automatically enrolled residents under 40 in pension accumulation unless they opted out. From 2026, pension accumulation will be voluntary – everyone will have to make their own decision and submit an application for accumulation or opting out.
Withdrawal of 25 Percent of Accumulated Funds
A new option – to withdraw 25% of the accumulated amount once before retirement age.
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This withdrawal will be exempt from income tax.
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The funds can be used for purchasing housing, paying off debts, or other personal needs.
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However, a smaller accumulated amount means a lower future pension.
Option to Withdraw from the System by the End of 2027
Residents will be able to completely withdraw from the second pension level and recover:
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all paid contributions,
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investment gains.
After 2027, this option will be limited, so lawyers recommend considering this deadline.
Simplified Contract Termination Procedure
The contract can be terminated by directly contacting the pension fund or "Sodra".
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Upon termination of the contract, contributions will be suspended, and funds will be returned according to the law.
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It is important to understand that withdrawing may result in losing the opportunity to benefit from state-sponsored contributions in the future.
Legal Aspects to Know
Civil Relations and Contracts
Pension accumulation contracts are civil contracts, therefore they are governed by the Civil Code of the Republic of Lithuania. When terminating a contract, it is necessary to comply with the deadlines and conditions set by law.
Tax Issues
Although withdrawals will not be taxed income tax, they may affect social benefits, compensations, or income declarations.
Inheritance
Pension funds are inheritable, so lawyers recommend including them in a will or inheritance agreement. This is especially important if family relationships are complex.
Practical Advice for Residents
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Evaluate your financial goals – if you plan to withdraw 25% of the accumulated funds, ensure that it will not significantly impact your future pension.
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Keep track of deadlines – the option to withdraw from the system will only be valid until the end of 2027.
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Consult a lawyer – especially if you have additional accumulation contracts or other financial obligations.
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Manage inheritance documents – specify who will inherit the accumulated funds.
Recommendations for Employers
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Review employment contracts – if they include additional pension contributions, they may need to be adjusted.
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Inform employees – clear communication will reduce the likelihood of disputes.
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Assess tax implications – changes in accumulation conditions may affect the structure of contributions and salaries.
Why Consult a Lawyer?
A lawyer can help:
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assess the risks of contract termination,
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prepare amendments to a will or inheritance agreement,
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advise on taxes and social guarantees,
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ensure that decisions align with long-term financial interests.