Recently, the ministers of labor and finance, as well as other deputies from the PSD-PNL coalition, have been persistently asked: is there money to increase pensions next year? It is about the indexation of pensions by almost 14% from January 1, 2024.

The answer can be seen by looking at the budget: we have a chronic budget deficit because for more than 30 years we have been going way outside our comfort zone.

Today, at the moment, there is no such money. They are not collected somewhere specifically along the lines of a Tier II or other type of pension or investment fund.

Month after month, we, the workers, and annually those who have PFA (generally independent activity), deduct 25% for pensions (of which 3.75% goes to level II) to the budget.

Since the pension budget also has a deficit, it, in turn, feeds on other money, that is, on other collected taxes, as well as on loans that the state makes on behalf of the youngest. In general, we give loans today, but we will return the money sometime in the future: either we, if we are a little younger, or our children, generally future generations.

The hole increases the national debt. In September 2023, it accounted for 50.5% of GDP.

How is the debt paid? Due to the increase in future taxes

When the money collected goes to non-investment costs, only additional taxation tries to cover the need. Those who pay taxes today will be out of pocket more in the future. Others who dodge are likely to continue to dodge. They do this because they don’t want to pay these amounts because they think they are too high. So all payers will suffer.

Additional taxation often does not solve the budget problem.

From 2024 we have higher taxes, including new ones, in the hope that pension increases can be covered. Since it’s an election year, a lot is promised. The bill will grow, and it will be necessary to pay in 2025. This is not new, we have already been told: be prepared that we will pay a lot. It’s still better than being shocked. They were very transparent about what to expect.

Returning to the topic. This does not mean that pensions should not increase. There is a need for those who have worked all their lives to be able to live out their old age in peace. Inflation was high last year and is quite high this year as well.

The problem with us is that the state cannot collect the taxes it also imposes – either through evasion (when you see the VAT gap, you know something is wrong) or because of the failure of the ANAF. So the members of the PSD-PNL coalition decided to tax even good payers, those who already pay.

Rating agencies do not believe the new taxes will cover the increases in the new pension law. This is normal. You need a lot more.

Asians who come to work in Romania will also try to pay their pensions. Next year there will be another 100,000 contingent. They usually come to work for about 2 years. If there was no such delay, bringing Asians to the country sooner would help both companies and the state. Retirement money would be collected faster. After all, every penny counts.

Answering the question in the title: the money will come from the extra taxes we pay and the loans we make (additional debt). The question is whether they will struggle to allocate insufficient amounts to health care and education to keep the deficit target lower (given recent warnings from rating agencies) this year as well. Everyone suffers here.

When you reach the last months of the year and you see that there is not enough money for Health, it is clear that you did not “bubble” from the entire budget. You influence everyone. We are paying for a service we cannot use, which is not normal. In the end, supplies from the Reserve Fund started with some delay, but this is not normal. This problem should not have existed if the budget was executed well.

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