Lithuania Warns: Withdrawing Pension Funds May Affect Social Support

Lithuanians who withdraw funds from the second pension pillar risk impacting their eligibility for social support, according to a warning from the Ministry of Social Security and Labor (SADM). The ministry emphasizes that cashing out accumulated pension funds alters an individual's financial standing, which is a key factor in determining eligibility for various forms of social assistance and services.

"If a person decides to withdraw their accumulated funds, for example, by terminating accumulation in the second pension pillar – exiting through the so-called 'window' by the end of 2027 – those funds become their income," explained Minister Jūratė Zailskienė. "This means they will be included when assessing what monetary social support or social services the person is entitled to. In certain cases, this could lead to a reduction in the amount of monetary social support or its loss."

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If a person decides to withdraw their accumulated funds, for example, by terminating accumulation in the second pension pillar – exiting through the so-called 'window' by the end of 2027 – those funds become their income. This means they will be included when assessing what monetary social support or social services the person is entitled to. In certain cases, this could lead to a reduction in the amount of monetary social support or its loss.

The ministry clarifies that this applies to assessments for social allowances, housing heating and water cost compensations, social support for students, and additional payments for children in low-income families. Typically, income for social support is calculated based on average earnings over the three months preceding the application month. With pension funds being paid out by mid-July, individuals applying for benefits in September could see their withdrawn funds counted as income, potentially affecting support levels for up to three months.

Individuals receiving monetary social support are obligated to report any changes in their financial situation to their municipalities within one month. However, there are exceptions where withdrawn pension assets are not considered income for social support purposes: if the withdrawal is due to a disability level of 70% or higher, if palliative care is prescribed, or if the individual is diagnosed with a severe illness listed by the ministers of health and social security. The ministry urges citizens to weigh these financial decisions carefully, considering the potential short-term impact on their social benefits.

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This needs to be assessed and kept in mind.