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05.09.2019
Latvijas Pasts has been announced the winner of the public procurement launched by the State Social Insurance Agency (VSAA) for the delivery of the granted state pensions, benefits and allowances to the recipients’ places of residence from the 1st of January 2020. As the use of modern technology grows, fewer and fewer customers are opting for this exclusive service, leading to its higher cost price, which is also impacted by an increase in cash collection service costs, investments in solving security-related issues, necessary salary growth for the employees involved in delivery of pensions and benefits, as well as an expected increase in fuel costs due to the increase in excise tax from 2020.
Latvijas Pasts took part in the tender launched by VSAA on the 26th of July 2019 and was announced the winner with its offer for the provision of the cash delivery service for the VSAA customers at their places of residence at a rate of EUR 4.88 from 2020 and EUR 5.28 from 2021. It would be financially disadvantageous for the company to provide this service at a lower rate.
“As the use of modern technology grows, fewer and fewer customers are opting for the exclusive cash delivery service at home, thus leading to its higher cost price, which is also impacted by an increase in cash collection service costs, investments in solving security-related issues, necessary salary growth for the employees involved in delivery of pensions and benefits, as well as an expected increase in fuel costs as a result of the increase in excise tax from 2020,” Mārcis Vilcāns, Chairman of the Board of Latvijas Pasts, points out.
The number of recipients of pensions, benefits and allowances opting for home delivery is declining rapidly each year, thus significantly affecting the cost price of the service. For example, in 2013 pensions were delivered in this way to 127,000 clients at their places of residence per month, whereas in 2018 the number of such clients decreased to 85,000 and in the first months of 2019 they amounted to only 79,000. In 2018 the number of pensions delivered to places of residence fell by an average of 785 units each month and by an average of 650 units in the seven months of 2019. Thus, offering this service at a lower price in the future would even cause losses to the company.
Latvijas Pasts has made every effort to maximise the efficiency of cash handling by outsourcing this process from 2018, as well as reviewing workloads and implementing an automated cash transfer solution. However, these measures cannot compensate for the actual increase in the cost of the service.
Latvijas Pasts employs around 1,300 postmen – the average salary of this employee group has increased by 15.5% since 2018 and it is expected that this increase will continue gradually. In turn, the cost of cash collection services provided to Latvijas Pasts by external economic operators grew by 27% in 2018, while their forecast price increase will be another 45%.
The cost of home delivery of pensions, benefits or allowances are covered by the recipients of these payments, with the VSAA withholding the relevant amount and making a transfer to Latvijas Pasts. On average, the VSAA services with delivery to the place of residence are received by 79,000 clients or 14% of all pension recipients monthly.
In Estonia the cost of the pension and benefit delivery service to the place of residence is set at EUR 8.10, while in Lithuania home delivery of pensions through the intermediary of the post is provided only to people with disabilities and persons who are not able to withdraw cash in their area, as well as those over 80 years or those who concluded the contract for the delivery of their pension/benefit to their place of residence in the period up to 2009.
About SJSC Latvijas Pasts
Latvijas Pasts ensures the widest availability of postal services throughout Latvia by maintaining more than 600 post offices. The primary function of the company is provision of the universal postal service; Latvijas Pasts also provides commercial transport, express mail, payment, press subscription, retail and philatelic services. Latvijas Pasts is a wholly State-owned company with around 3,800 employees. The quality measurements of Latvijas Pasts domestic mail deliveries are regularly conducted by Kantar TNS, one of the leading market, social and media research agencies in Latvia. In turn, the quality measurements of the cross-border deliveries are provided within the framework of the International Post Corporation through the intermediary of the research companies Kantar TNS, Ipsos and Quotas.
Additional information:
Gundega Vārpa | Head of External Communications
Phone: +371 67608505
E-mail: pr@pasts.lv; gundega.varpa@pasts.lv
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