Government looks into pensions and allowances

The coalition government in Romania is planning to amend the Law on special pensions

Roxana Vasile, 01.08.2017, 13:17

After the Cabinet formed by the Social Democratic Party and the Alliance of Liberals and Democrats focused for about six months on the salaries of public sector employees, it is now the turn of pensioners to have their incomes scrutinised.

The measure does not concern the large category of pensioners whose benefits are proportional to their life-time contributions to social security funds, but those who receive the so-called “special pensions, namely former diplomats, pilots, magistrates, and former employees of the Defence Ministry, Interior Ministry and the intelligence services. The average benefits paid to these categories reach nearly 2,000 euros, and this is outrageous for a country where the overwhelming majority of the 5.3 million pensioners receive in average ten times less than that.

Under these circumstances, the Government intends to change the law that regulates special pensions. Without reducing the benefits paid at present, the Cabinet intends to keep future pensions below the salary earned by the respective people while employed. Special pensions will no longer be adjusted to the salary increases granted to those employed on the same positions, but only to the inflation rate. Here is the president of the Social Democratic Party, Liviu Dragnea, explaining the reasons behind this plan:

Liviu Dragnea: “The greatest risk here is that, unless we do something about it, the budget impact of these special pensions, which currently stands at 6 billion lei, may get to 10-11 billion in two years time, perhaps even 15 billion. At this rate, these pensions may put a lot of strain on the public budget, to the point of making it impossible for the government to increase the benefits of the other several millions of pensioners in Romania.

The National Liberal Party, in opposition, is not happy with the idea. The senior vice-president Ilie Bolojan explains:

Ilie Bolojan: “Throughout its election campaign, the Social Democratic Party said nothing about changing the special pensions, about reducing or confining them. As for operating these changes by means of an emergency order, we are against this solution, because, as the bill on the unified pay scheme has proved, rushing a bill through and failing to assess all the effects it may create triggers negative consequences in other fields.

Just as it has luxury goods and luxury pensioners, Romania also has luxury children, whose parents receive much higher allowances for their rearing, prorated to the parents salaries. The ruling coalition in Bucharest has decided to put a cap on these allowances, and the Labour Minister Olguta Vasilescu suggested a ceiling of 1,800 euros per month.

In another move, as of August 1 employers pay contributions to the public pensions and healthcare schemes for their employees proportional to the minimum national salary for full time employees, even for their part-time staff and for salaries below 322 euros. The goal is to avoid cases when part-time employment contracts are signed by employers in order to avoid higher taxes and contributions.

(translated by: Ana-Maria Popescu)