Moldovan government approves pension system reform

Chisinau, 5 December /MOLDPRES/ - The cabinet of ministers, at a today’s meeting, approved a string of amendments and completions to the legislation on the pension system. The document reduces the inequities in the system, regards the constant and solid increase in the revenues for beneficiaries and ensures the work of a sustainable pension system, including from the financial viewpoint, the government’s communication and media relations department has reported.     

The draft provides for a single approach for all citizens, excepting the employees of the law-enforcement bodies: the same retirement age, the same length of pensionable service and the same formula of pension’s calculation.   

The document also proposes a new formula of calculating the age limit pension, which is to ensure the inter-dependence between the contributions to the social insurances and the pension’s size. At the same time, the valuing of the insured monthly income, carried out till 1 January 1999, will be taken into account. For instance, presently, the average rate of replacement for Moldova’s pensions accounts for only 26 per cent of the average salary. Following the enforcement of the new formula, at a complete length of service of 33 years, the replacement rate will be 45 per cent, and applied to a salary of 5,050 lei, this would mean 2,250 lei, or by about 90 per cent more than the average pension for 2015. The pensions will be calculated according to the new formula starting from 1 April 2017, and the earlier established pensions being also recalculated.      

“It is not fair when the pension of some categories accounts for 75 per cent of the average salary, while for the overwhelming majority of the pensioners, this replacement rate is thrice lower, of only 26 per cent to the average salary. The pensions’ reform is necessary, so that everybody could get a decent and fair pension, calculated correctly depending on the contributions made,” Prime Minister Pavel Filip said, referring to the need of the reform promoted.      

At the same time, the cabinet chose the method of a slow increase in the retirement age, by six months annually for women and four months annually for men, and will reach, in 2026, the age of 62 years for women and, respectively, 65 years for men. At the same time, the length of pensionable service will be adjusted accordingly, during six years.  

Another novelty of the draft law deals with setting the anticipated pension. The persons who contributed to the social insurances system and confirm the necessary established length of service, can demand setting the anticipated age limit pension, by three years before reaching the standard retirement age at the most.  

Statistics data shows that, at present, about 570,000 pensions receive a pension under 1,300 lei, while some categories of beneficiaries have pensions of up to 8,000 lei.  

The document is to be submitted to parliament for consideration.

(Editor L. Alcaza)