Government plans to recalculate pensions

The ruling coalition in Romania has decided to recalculate pensions and plans to raise them in keeping with the current economic situation.

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Corina Cristea, 29.01.2021, 13:50

The tensions between the power and the opposition in Romania are far from over. The Liberal Labor Minister Raluca Turcan has announced that pensions will be recalculated and that the reevaluation of over 5 million files has started and it will take around one and a half years. After this stage is completed, a new law of the public pension system, based on contribution and equity can be drawn up. Minister Turcan explains: “We have a number of possible formulas to calculate pensions and we keep looking for the most equitable one, that can also be sustained by the pension system. I say this because one thing that has not been discussed, and which was unfair to 5 million pensioners, was that Law 127, which instated a new pension calculation formula, required a budget that no economy, similar to the Romanian economy, even before the economic crisis triggered by the pandemic, could have afforded.”

A 40% raise in pensions as of September 2020 had been decided by the Social Democrats, who held majority in Parliament when the decision was taken. However, the Liberals, who were in power last fall, did not enforce the measure and issued an ordinance that only raised pensions by 14%. The initially planned 40% raise, proposed by the Social Democrats, would require 28 billion euros from the state budget.

Romania did not afford to increase pensions last year and does not afford to do this at present either, Liberal PM Florin Citu said, invoking the poor economic context generated by the pandemic. The Government appealed at the Constitutional Court the Social Democrats’ law increasing pensions by 40%, but the Court rejected the appeal, and only partially admitted an objection of unconstitutionality, as regards the judicial uncertainty around the value of the pension point.

The removal, by the Social Democratic MPs, who held majority in Parliament last year, of the ordinance issued by the former Liberal government headed by Ludovic Orban, of the articles stipulating a raise in pensions by only 14%, creates a legal gap, because a new value of the pension point has not been specified, with the MPs expecting the 40% increase to be enforced automatically. The Social Democrats, in the opposition, have rejected the stand of the Government, have asked for the increase in pensions stipulated by the law in force and insist that the current legislation must not be modified. The latest recalculation of pensions took place in Romania in 2005-2010, when around 1 million pension files were analyzed. (Translated by EE)