Social measures and proposals

The Labour Ministry in Bucharest has announced the minimum guaranteed social pension has increased from 400 to 520 lei, as of March 1. The measure benefits over one million people.

Leyla Cheamil, 02.03.2017, 13:34

Pensioners in Romania account for some 5 million people at present. As of March 1, over one million of them will receive a pension increase of 120 lei, approximately 27 Euro, because the social indemnity for pensioners has been increased by 30%, from 89 Euros to 115 Euros. The minimum guaranteed social pension was introduced by the Boc cabinet in 2009, to increase the incomes of those who either worked without employment contracts or worked for an insufficient number of years, and thus they did not contribute enough money to the budget.

The Labour Ministry has announced the social indemnity is paid from the state budget, and it is the difference between the social threshold of 520 lei, some 115 Euros and the actual level of one’s pension, calculated in accordance with the level of one’s contribution. The indemnity is not a distinct category of pension, which is granted unconditionally. It sets an income threshold, for any pension established based on the contribution principle to be raised to the respective threshold, the line ministry has announced.

The beneficiaries should be pensioners of the public system in Romania, should be domiciled in Romania, and their cumulated incomes, from pensions and other incomes set and paid by territorial Pension Houses, based on special laws, should not exceed the maximum legal level of the social indemnity. This increase is one of the main objectives and priorities stipulated in the 2016-2020 governing program, as a measure to curb poverty and improve the population’s living standards. Furthermore, the Labour Ministry has announced that as of July 1, the value of one pension point will go up to 1,000 lei, some 222 Euros.

Actually, pensioners benefited from another pension increase on January 1, 2017, when the pension point increased by 5.25 %, up to 917.5 lei (204 Euros). The measure was also applied to public military pensions. In another move, in an effort to encourage entrepreneurs to invest in Romania and to increase salaries, the National Liberal Party, the main opposition party in Romania, has made a new proposal, that of reducing labour force costs. Therefore, the Liberal MPs have submitted a bill to amend the Fiscal Code.

The interim president of the National Liberal Party, Raluca Turcan, has further details: “The bill stipulates the reduction of the social security contribution quota paid by the employee and the employer from 39.25% to 32.25%, reducing the income taxation quota from 16% to 10%, reducing the profit taxation quota from 16% to 10%, transferring the full payment of unemployment insurance from the employer to the employee and reducing the contribution quota for vacations and indemnities”.

If applied, the initiative will bring to the state budget some 8 billion lei, some 1.8 billion Euro, the National Liberal Party claims.