As we look ahead to 2026, several significant legislative changes are on the horizon in Lithuania.
As we look ahead to 2026, several significant legislative changes are on the horizon in Lithuania. These changes are set to impact various sectors, including insurance, health & benefits, and pensions. Here’s a detailed look at what to expect:
State Security Tax on Non-Life Insurance
Starting from 1 January 2026, a state security tax will be introduced for all non-life insurance contracts, except for civil liability insurance for the use of a vehicle by natural persons. This tax will be set at 10% of the annual insurance premium.
Tax-Free Limit for Employer-Paid Health Insurance
From 1 January 2026, an annual tax-free limit of €350 for employer-paid private health insurance will be introduced. This amount will be applied as a tax relief, and any amount exceeding this limit will be taxed as income in kind. This tax reform poses a threat to voluntary health insurance as it could increase the cost of insurance by up to 50%, reduce the number of insured persons, and increase pressure on the public health system. Employers may also be less motivated to offer additional insurance benefits if they become too expensive.
Pension Pillar II Reform
Significant changes are also planned for the second-tier pension system. From 2026, automatic enrollment into the second-tier pension system will be abolished and replaced with a voluntary call model. Locals will be informed and will have the option to make their own decisions. There will be a transitional period from 2026 to 2027, during which those already accumulating in the second pillar will be able to withdraw. It will be possible to withdraw contributions and investment gains, with state contributions converted into “Sodra” points. Additionally, a one-time withdrawal of up to 25% of the accumulated funds will be allowed, but not more than the person has deposited. Special provisions will also be made for those with serious illnesses, disabilities, or palliative care needs.
A Pros & Cons Analysis
As these transformative policies take shape, it is crucial to assess their broader implications – not only from a legislative standpoint, but also in terms of their tangible effects on individuals, employers, and the public sector at large. The following analysis weighs the potential advantages and drawbacks of each reform, providing a balanced perspective to help stakeholders navigate the changing landscape.
Financial Impact
Employee Motivation
Public System Pressure
Recommendations
To prepare for these legislative changes, it is essential for businesses to anticipate higher insurance premiums and adjust their budgets accordingly. In addition, employers should review and modify their employee benefit packages to ensure they remain both attractive and cost-effective. Educating employees about the forthcoming changes – and explaining how these developments may impact their benefits and retirement savings – will also help organisations navigate the transition smoothly.
By staying informed and proactive, businesses can navigate these legislative changes and continue to offer valuable benefits to their employees. Reach out to our experts to find out more about these proposed changes in 2026:
Kęstutis Statkevičius
Health and Benefits Specialists
GrECo Lithuania
T +370 614 79 928
