Moldovan labour ministry submits draft law on pension system reform for consultations

Chisinau, 30 November /MOLDPRES/ - The Labour, Social Protection and Family Ministry has submitted a draft law on the pension system reform for consultation. The document provides for a new formula of pension’s calculation, providing a fair, financially stable pension system, as well as increase in the retirement age and unification of the way social insurances pensions for some categories of citizens are calculated.  

The draft sees a new formula of pension’s calculation, understood by everybody, which will make possible creation of a new service (online computer), that will give citizens opportunity to calculate the future pension. The size of the pension will depend on the contributions paid, and the income gained following 1999 will meet the present one, which automatically leads to pension’s increase, according to a press release by the Labour Ministry.    

Also, the draft provides for the unification of the way the social insurances pensions for some categories of citizens, MPs, government members, civil servants, judges, prosecutors are calculated. The document also sees exclusion of the “special length of pensionable service” of the social insurances public system, in order to reduce inequities from the system. Presently, civil servants and other categories have a pension equal to 75 per cent of the salary and a coefficient of 42 per cent is applied in case of other categories.  

At the same time, the new law sees gradual switch to the standard retirement age (62 years for women and 65 years for men), by six months annually starting from 1 January 2017 till 2026. The ministry reasons this amendment by the fact that the rate of demographic ageing has increased from 13.6 per cent in 2005 to 16.2 per cent. At the same time, according to forecasts, till 2035, the share of Moldovans older than 60 will account for 25 per cent of the population.   

The increase in the retirement age and, respectively, of the length of pensionable service necessary for women from 30 years to 33 years and from 33 years to 36 years for men will contribute to a significant rise in their contribution to the pension system’s financing, the Labour, Social Protection and Family Ministry said. Presently, the average length of pensionable service for women is by 25 per cent shorter than the one for men; as a result, women have a smaller pension than men.  

The increase of the retirement age for women was “frozen” in 2003, and starting from 1999, the salaries used for calculating the wage payment basis in pensions’ formula were not re-evaluated or valued to take into account the cumulative increase of the average salary from the moment when the salary was earned till the retirement date. The re-evaluations which are scheduled to be carried out in stages, depending on the retirement year, will lead to a 5-25-per cent increase in pension.   

Also, the owners or leaseholders of farmlands, as well as the employees of law-enforcement institutions will be obliged to pay the social insurances. A farmland owner will have to pay 1,920 lei in the state social insurances budget in 2017; in 2018, this sum will reach 2,069 lei and in 2019 – 2,248 lei.  

Under the draft, a maximal pension could not exceed five average monthly salaries on the economy in Moldova.  

If the draft law is approved by the parliament, a single institution (instead of six) will set and pay the pensions – the National Social Insurances House. This will influence the conditions and way the pensions is established for the employees of the law-enforcement bodies and will provide transparency in managing a public money, the Labour, Social Protection and Family Ministry added.  

(Reporter V. Bercu, editor L. Alcaza)