Romanian Labour Minister Rovana Plumb Monday promised that the Government would not change the compulsory private pension system
In a roundtable discussion focusing on changes in the compulsory private pension system in Romania, Labour Minister Rovana Plumb said the Government would make an analysis of the current system, with assistance from the World Bank. The authorities are aware of the long-term sustainability problems of the public pension system, Rovana Plumb said. She added that the system needed reforming. She explained however that the compulsory private pension scheme, the second pillar of the overall pension system, would remain unchanged, and that the Government was working on the fourth pillar, which consists of occupational pensions.
During the same discussion, Adrian Vasilescu, advisor to the National Bank Governor, warned against the lack of awareness among the general public with respect to the benefits of private pensions. In recent years, he said, the impact of investments in private pension schemes has been evident at macro-economic level, and will have positive effects in the long run. According to official data, by the end of this year, the number of employees will have become roughly equal to the number of pensioners, around 5 million people.
This is, on the one hand, because no more early retirements have been approved, as it happened in times of economic restructuring, and on the other hand, because public institutions, particularly in healthcare and education, have no longer resorted to personnel downsizing. The retirement age in Romania has also been increased, and the retirement age for men and women is expected to be equal in 2030, as stipulated in Romania’s agreements with the EU. According to some surveys, a decent pension should be 80% of the average national wage, that is, 1,500 lei instead of the current 844 lei.
Another idea discussed on the same occasion was that, in the coming two years, salaries in the public sector might be raised by up to 30%. Prime Minister Victor Ponta says nonetheless that the Government’s priority is to increase child benefits for underprivileged families and to double the food ratios for institutionalized children.
For the time being, the Romanian social security system remains complicated and variable. In the past ten years alone, the Pension Act has been amended 70 times. Experts argue that the required changes are of a structural nature and exceed the actual tools available to the management of a pension system. In order to ensure a proper pension system, Romania needs increases in labour productivity and in employment rates, as well as attractive immigration policies.