The problem of the state pension system is that the number of contributors is small, and at the same time the state has low revenues (that is, there are problems with fees). Therefore, there is a large deficit in the pension budget, which is covered from the state budget, that is, funds are taken from education and health care.
Similarly, the same people who retire in different years have different pensions in Romania, and at the same time we do not have a transparent pension adjustment mechanism, according to Cătălin Păuna, a senior economist at the World Bank.
“In general, pension expenditures as a percentage of GDP are low by European standards. We have a low ratio of payers to beneficiaries. I think there are 1.1 contributors per 1 beneficiary, which I think is the weakest in the European Union. So these things are hard to fix in the short term because labor market trends are very long-term in nature. So we’re stuck with these 1.1 to 1 odds for maybe 20 years,” he said.
We also have many pensioners with small pensions.
*He also reminded that in Romania we also have special pensions, a discussion about their abolition continues in the public space.
“The pension fund has a deficit of about 2% of GDP. This means that funds are taken from the state budget to cover the pension. Let me remind you that we have low budget revenues as a percentage of GDP,” the World Bank expert explained.
- That’s why we take more resources from there (from the state budget – no) from education, health care, to cover the deficit from pensions.
- The pension reform is included in the PNRR.
“The same people who retire in different years receive different pensions. It should be a medium-term corrective mechanism. A transparent adjustment mechanism should be promoted. We have many examples in Europe that relate to different indicators, such as inflation, real wage dynamics, etc. You can come up with an automatic adjustment of pensions that is not affected by political decisions,” Ketalin Pauna also noted.
Read also:
Resolving the inequality between pensioners is postponed again: for a year and a half / Bohdan Dumitrescu (ASE): The transition to a new calculation formula should not involve the recalculation of pensions
Anatomy of an error in the pension system. Decisions that got us here
Source: Hot News RO
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