Romania sees drop in pensioner numbers

A discussion about the causes of the decrease in number of pensioners in Romania in recent years.

Christine Leșcu, 10.11.2021, 14:00

According
to the labour ministry, the number of Romanian pensioners at the end of June
was 61,000 lower compared with the first half of 2020. Moreover, compared with the
same period in 2019, the number is two times and a half lower, accounting for
the biggest drop in the number of pensioners since 2013. With the Covid-19 pandemic
still very much around, death is the first thing that comes to mind as an
explanation for this decrease in the number of pensioners. Economic analyst Cătălin
Ghinăraru explains:

These
exits from the system are either the result of natural causes or the fact that
the legal conditions are no longer met. By this latter case I’m referring to retirement
due to sickness. In this case, the retirement is not definitive, meaning that
the person who is unable to work temporarily because of an accident or illness
is not retired for good. They have to undergo regular physical examinations and
if found that they are recovered, they must return to work and thus exit the
pension system. So that’s one explanation.

If
we look, however, at the overall picture of the pension system, we also see a
reduction in recent years of entries into the system, that is a drop in the retirement
rate. Economic analyst Cătălin Ghinăraru talks about such cases:

There’s
also a circumstantial cause, so-to-speak, but the number of pensioners has been
on the decrease for some time, roughly from the first decade of this century, as
a result of structural changes. Firstly, the effects of laws no. 19 and 263 began
to be seen, two laws that raised the retirement age beginning in 2015, to 65
for men and gradually for women to reach 63 by 2030. Also, under a
Constitutional Court ruling, women may choose to stay in work until 65, like
men. So, we have this increase in the standard retirement age, which means that
both men and women remain longer on the labour market. Moreover, stricter
conditions are now in place for early retirement due to sickness. So, apart
from the circumstantial factor related to the pandemic, which results in higher
death rates among the elderly, there are also structural causes arising from a
reform of the pension system and whose effects are now starting to become
visible.

Faced
with an ongoing demographic crisis, like many other developed states, Romania
anyway has an unbalanced ratio of pensioners and people in employment. So, at first
sight, the decrease in the number of pensioners may look like good news. Cătălin
Ghinăraru:

The
ratio between active persons and inactive persons and pensioners is not very
good in Romania. The fact that the number of pensioners is seeing a slight
decrease is, let’s say, an encouraging sign. We have a problem with the
sustainability of this pension system, but we must also stress that this trend
will not last much longer, given that from 2032 in particular, we will be
seeing a sizeable generation going into retirement, those born at the end of the
1960s, as a result of a baby boom encouraged by the communist authorities. If
retirement conditions are maintained until then, we will, indeed, see a large
intake of fresh pensioners.

This
may perhaps explain why there has been increasing talk recently about making
new changes to the pension legislation aimed at raising the retirement age to around
70, an idea that is met with opposition from the population. Economic analyst Cătălin
Ghinăraru tells us how he sees the situation:

The
idea to raise the work-place pension contribution to 40 years was not received
well, neither in Romania, nor in other EU countries. It’s quite a long time to
be in employment and work conditions in Romania are not the most favourable.
Many are even thinking they may not be able to finish these 40 years. This is
why the current law, as well the draft of the future law, includes the
possibility of purchasing pension contribution. It’s also true that behaviour
may change in time. It’s possible that the generations of people born in the 1960s
and 1970s will think differently from earlier generations, given that they entered
the labour market in conditions of free market.

For the time being, however, it’s hard to predict
these generations’ choices and behaviour when they reach retirement age. It also
remains to be seen what changes will be made to the legislation and how these
will influence people’s views regarding retirement.