Changes in the public pension system

Romanians with sufficient seniority can buy up to six years of contribution to the pension fund

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Bogdan Matei, 23.06.2021, 01:50

Marred by anomalies and inequities, as even the politicians who manage it admit, the public pension system in Romania must be fundamentally reformed. Legislative ideas and initiatives are not lacking, but their implementation is proving difficult. On Tuesday, the law on purchasing seniority in work was promulgated by President Klaus Iohannis. The normative act establishes the legal framework for completing, by the persons who do not have the quality of pensioner yet, the contribution period in the public pension system, necessary for granting an old-age pension, an early retirement pension or a partial early retirement pension.

Those interested can buy a maximum of six years of seniority prior to reaching the standard retirement age. The payment of this social security contribution can be made in a single instalment or monthly, until August 31, 2023. Among the potential beneficiaries are the millions of Romanian expatriates, looking for a better life, usually in Western Europe, and who have incomplete contributions to the Romanian pension fund. There are also people in the country with incomplete work seniority either because, at some point, they remained unemployed or because they chose to free-lance, found various undeclared jobs and no longer paid contributions to the pension system.

Experts do not yet dare to anticipate the effects of the new law. However, they have long warned that the entire system risks becoming unsustainable when the mass retirement of people born in the late 1960s and early 1970s takes place. Back them, following a decree by the former communist regime, abortions were banned, and Romania experienced a demographic boom.Subsequently, the birth rate has gradually decreased, and demographers and sociologists have long said that there is a risk that there will be no one to pay for the pensions of those born in the 60s and 70s.

In addition to these demographic developments, there are situations that policymakers themselves call absolutely abnormal. This is the term used by the Minister of Justice, Stelian Ion, with reference to the fact that the former head of DIICOT (the anti-mafia prosecutor’s office), Giorgiana Hosu, is retiring at the age of 49. Retirement at a young age is a privilege for magistrates, the military, police, intelligence officers, politicians, diplomats and other beneficiaries of so-called special pensions, who do not observe the principle of contribution.

Many of these special pensions are in the thousands of euros, while the pensions of ordinary contributors reach, on average, the equivalent in lei of only 300 euros. A law that provided for the taxation by 85% of special pensions exceeding 7,000 lei (1,400 euros) was invalidated by the Constitutional Court, whose members are themselves special pensioners. (MI)