"We aim to increase public confidence in the pension system with these changes," Ruginienė told reporters on Thursday.
Withdrawals before five years and less to retirement age would be subject to personal income tax for the people with small accumulations and for those wishing to take up to 25% of their accumulations at one time.
Personal income tax would not apply in cases where the entire accumulated funds are to be withdrawn by residents who have lost 70-100% of their social participation, have a serious illness listed by the Ministry of Health, or have an established need for palliative care.
Another proposal sets out a personal income tax relief for contributions to the second pillar pension scheme. They could be capped at the level of the savings incentive currently paid from the state budget, i.e. EUR 365 per year.
The ministry also proposes a 12-month window to freely opt out of the second pillar pension scheme due to an unsatisfactory update of the conditions.
The proposed changes also envisage scrapping the current automatic enrolment into the second pillar pension scheme every three years and residents would be offered to start saving voluntarily instead. Employers would also be able to make an optional contribution to their employees’ pensions.
The proposals are part of the Government’s programme and were endorsed earlier on Thursday by the presidium of the ruling Lithuanian Social Democratic Party (LSDP).
In February, the Ministry of Social Security and Labour will hold consultations with social partners and interested groups. The ministry plans to take the final motion to the Seimas in the spring session.