In the first half of 2026, nearly 30 thousand new accumulation contracts were concluded in the II pillar. One of the reasons is the tangible result: people saw the actual accumulated amounts and that the average return generated by the funds more than doubled their own contributions.
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However, after withdrawing the money, another question arose – what to do with it. Money kept in the account does not grow by itself, and its value is reduced by inflation. Not knowing how to employ it, and not wanting to invest independently, a simple way to take care of one’s financial future is accumulation in the II pillar – where professionals in this field take care of investing, regular contributions, and long-term accumulation.
In a sense, the very question of where to keep or invest the withdrawn funds further reminds us of the function of the II pillar. Therefore, it is natural that residents return to accumulate in it.
The benefits of long-term investing
Pension funds continue to generate solid returns. Since 2019, the average return of life cycle funds has reached 109%, and some equity funds have exceeded 130%. However, it is precisely time and accumulation stability that allow good fund results to turn into a significant accumulated amount. Regularly invested contributions gradually increase not only the accumulated amount but also the investment return, which makes up an increasingly larger part of it.
For example, if a person earning an average salary, together with the state incentive, allocated about 110 euros per month, and the average annual return was 9%, a person starting to accumulate from 18 to 65 years old would theoretically accumulate about 860 thousand euros, while starting from 35 years old – only about 187 thousand euros.
Although this is only an illustrative calculation, as returns, salaries, and state incentives change over time, it clearly shows the importance of time – starting later or stopping accumulation significantly reduces the compound interest effect and the result.
The II pillar structure itself is also favorable to residents. Unlike many other investment instruments, the fee for investing and managing money here is limited by law. Unlike the “Sodra” pension, funds accumulated in the II pillar are inheritable, and the state also contributes to accumulation, significantly increasing the final amount.
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Life cycle funds are also important for long-term accumulation – investment risk is adjusted according to age. For younger people, it is higher because there is more time to withstand market fluctuations and seek higher long-term returns, while as retirement approaches, risk is reduced to make the accumulated assets more stable.
Birth rate has almost halved
Why is it important to talk about accumulation now? In 2015, 30.1 thousand children were born in Lithuania, and in 2025 – only 17.6 thousand, or 42% less. In 2026, the number of births was again lower than the previous year, while over 40 thousand Lithuanian residents reach retirement age annually.
With decreasing future working generations, an increasing burden will fall on the public pension system. According to calculations by the Bank of Lithuania, the number of workers per pensioner may decrease from 2.2 this year to 1.4 in 2050. Therefore, state decisions alone will not be enough – more responsibility for future income in old age will have to be taken by the individual.
It is possible to increase “Sodra” pensions faster, use reserves, or look for other short-term measures, but they do not solve the problem of where pensions will be paid from in a few decades.
So far, the world has not come up with a better model than the combination where part of the pension is ensured by state-redistributed workers’ contributions, and part is accumulated by the individual. Therefore, it would be rational now to rely on, improve, and strengthen the already functioning multi-pillar accumulation system.
People returning to accumulation is a positive signal. The II pillar remains an optimal and simple way to save disciplinedly, so more and more residents appreciate not only the amount withdrawn today but also what they will need to live on in a few decades.
