Lithuanians withdraw €3 billion, or 3% of GDP, from pension funds

More than 500,000 people in Lithuania have withdrawn over three billion euros from the country's second-tier pension funds since the government opened a two-year window allowing participants to exit the scheme at the start of this year.

The figure, equivalent to roughly three percent of Lithuania's gross domestic product or six percent of annual disposable income, was disclosed by Gediminas Šimkus, governor of the Bank of Lithuania, on Wednesday.

Background

Lithuania operates a multi-tier pension system. The second tier, known as pension accumulation funds, allows workers to direct a portion of their social insurance contributions into privately managed investment funds, with the state topping up contributions.

Participation had been broadly encouraged for years as a way of building long-term retirement savings.

However, the government recently changed policy to allow participants to withdraw their accumulated savings, opening a two-year exit window that runs until the end of 2027. Before the window opened, approximately 1.45 million people were enrolled in the system, with total assets of around 10.6 billion euros.

The scale of withdrawals

Around 550,000 people, nearly 40% of participants, withdrew from the scheme in the first quarter of 2026 alone, leaving approximately 860,000 still in the system.

Šimkus noted that the scale of the Lithuanian exodus already exceeds the total amount withdrawn in Estonia over its entire pension reform period, though he cautioned against a direct comparison given the differing sums and timeframes involved.

Where has the money gone?

Bank of Lithuania data for April showed that 72% of withdrawn funds, some 2.06 billion euros, remained in residents' bank accounts. A further 16%, or 450 million euros, was taken out in cash. 3% was used to make early mortgage repayments, 3% went towards other loan repayments, and 1% was reinvested into third-tier pension funds or investment life insurance products.

Economic impact

Šimkus said the withdrawals were expected to provide a meaningful cushion against the impact of rising energy prices on the Lithuanian economy.

"Assuming that between half a billion and 1.5 billion euros are directed toward consumption, the negative impact of energy prices on the economy is essentially fully compensated in macroeconomic terms," he said.

He pointed to a surge in sales of durable goods, including electronics and furniture, in April as early evidence that withdrawn funds were already feeding back into the economy, describing it as "a positive stimulus" that had coincided with headwinds stemming from instability in the Middle East.

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