The stalemate in the Coalition regarding the reform of special pensions continues. The recommendations of the European Commission regarding the percentage of calculation of military and judicial pensions undermined the system of “specialists”, and PSD and PNL shift their responsibility and do not make decisions. The minister responsible for the PNRR, Marcel Bolosh, even proposed on Wednesday the option of abandoning the reform of special pensions.

The quarrel between the two ruling parties could cost Romania 3.1 billion euros – the third tranche of the PNRR.

According to the government, annual spending on special pensions has reached 1.5 billion lei per year.

In the recommendation of European officials, two options are offered: the income replacement factor will be 45% and the basis of the calculation is related to the income for the entire career. European officials say in a letter sent to the government that adopting either would bring special pensions closer to the contributory principle

“The preferred option should be to take into account career earnings, as this will also increase the fairness of the system. This option can be adopted in combination with the alignment of the indexation of military pensions with the general system, which will ensure an adequate level of payments in the future,” said the letter sent by European officials.

Their recommendation nullified the draft law drafted by the Ministry of Labor and sent by the government to the parliament from the very beginning.

Political sources told HotNews.ro that the proposal put forward by European Commission officials would “cut military pensions below the average pension in Romania,” which would undermine the special forces system and create a stalemate in the judiciary and the army.

“In addition, European officials propose that the reform of special pensions should not be retroactive and that the special pensions currently paid should remain relevant. This would be a disaster because if those currently on the payroll are not taxed, those currently in the system will begin to retire. We would destroy the legal and military systems if we did as they suggest,” HotNews.ro sources claim.

In this context, Minister of Labor Marius Budai invited coalition partners to negotiations, as well as interested ministries of justice, internal affairs and defense to submit proposals and amend the bill in accordance with EU requirements.

“There is an impasse because the relevant Ministries of Internal Affairs and Justice (led by the PNL) do not want to participate in the discussions. A big problem is the Ministry of Internal Affairs, which has a strong union of former and current special specialists and who are pushing to abandon the reform of special pensions. Likewise in the judiciary, where magistrates threaten to block the system,” HotNews.ro sources explain.

At the first meeting of the task force, the Liberals told their government partners that it was the Department of Labor’s responsibility to come in and offer a solution.

“The PSD wants to pull the PNL’s chestnuts out of the fire and then maybe say that it has cut special pensions. Come with proposals,” PNL internal affairs sources told HotNews.ro.

For their part, the Social Democrats are worried that the Liberal ministers do not go to the working meetings on special pensions and do not come up with any proposals.

At the same time, on an unofficial level, the PSD accuses the PNL of asking to postpone the request for payment of the third tranche of the PNRR, which was set for the end of April. The Social Democrats say the deadline for the third tranche was at the end of April, and the PNL would have requested it in June after the PSD entered government.

The coalition must find a solution by next week, when the draft law submitted by the government to parliament is tacitly passed by the first mentioned chamber of the legislature, the Senate. In addition, according to the Government’s commitments, the reform of special pensions should be ready by the end of March.

• Which Europeans have special pensions and why Romania is a special case

How PSD and PNL are positioned

The most complaints were in the case of military pensions, no one from the leadership of the Coalition publicly suggested any intervention in this matter, referring to the issue of national security.

Investments and European Projects Minister Marcel Bolosh (PNL) suggested in a government statement on Wednesday that Romania may abandon the reform of special pensions. He referred to the danger of destabilizing some areas of “national strategic importance”, a risk that should be accepted politically if it is decided to meet the conditions set by the European Commission, whose tolerance, he commented, “tends to zero”.

“However, this is the country’s project and the country’s strategy, the National Recovery and Resilience Plan, but if we see that certain consequences of the decisions are not foreseen or the reform creates undesirable effects that cannot be managed (…) I said that they are already countries that have surrendered . Bulgaria abandoned decarbonization, Lithuania abandoned tax reforms, and I’m not saying we should do the same, I’m just saying that each reform should be analyzed in terms of the pros and cons it has and the consequences of those reforms adopted by the government. and the ruling coalition,” Bolosh said at Victoria Palace, quoted by Agerpres.

Meanwhile, PSD president Marcel Ciolacu said in an interview with Europa fm that he hopes that in the coming weeks a law on the reduction of special pensions will be voted in the parliament, which “will be constitutional and will not create chaos in Romania”.

“There is a big discrepancy between the practice in the European Union, I mean pensions of magistrates, pensions from the protection of public order, from national security, and what we assumed in the PNRR. Decisions and discussions with the European Commission must be very balanced. If at this moment we accept ad-litteram what we assumed in the PNRR, we will free the Ministry of Defense, the Ministry of the Interior, Justice, all services of Romania. If we want it, I don’t want it, we’re going ad-litteram (…),” said Marcel Cholak on Europa FM on Wednesday.

The PSD leader also said that next week the coalition is obliged to introduce certain amendments so that we can get as close as possible to reaching the milestone, because otherwise the law passes silently through the Senate and cannot be changed. As it is now, it is not perceived as the fulfillment of a PNRR milestone.”

How much does the PSD-PNL struggle and the impasse reform of special pensions cost us?

Romania committed to the European Commission through the National Recovery and Resilience Program (PNRR) to reform special pensions. The current legislation in combination with the decisions of the Constitutional Court has created an institutional impasse regarding the regulation of special pensions.

If Romania does not make the reform promised in the PNRR, it will not be able to access the third tranche of European money, and the deadline is the end of May.The quarrel between the two ruling parties could cost Romania 3.1 billion euros – the third tranche of the PNRR.

How much does the Romanian state pay for special pensions

According to the government, annual spending on special pensions has reached 12 billion lei. There are 10,000 beneficiaries of long-service pensions, the majority of which are military pensions – almost 180,000 – including pensions from MAI, MApN, SRI, SIE and STS.

According to the National Public Pension Fund (CNPP), in Romania in February 2023, 10,198 beneficiaries of long-term pensions were registered. 5,137 of them are retired prosecutors and judges.

In the case of beneficiaries of Law 303/2004 on the status of prosecutors and judges, the highest average pension for years of service is 21,477 lei, of which 20,061 lei is the share covered from the state budget, and 4,765 lei from the state social insurance budget.

In January, 743 people also received pensions for years of service from the Diplomatic and Consular Corps of Romania. The average pension was 5,796 lei, of which 2,552 lei were allocated from the state budget, CNPP reported, as quoted by Agerpres.

As for the beneficiaries of Law 215/2015 on amendments and additions to Law 7/2006 on the status of parliamentary civil servants, their number was 716, the average pension was 5,057 lei (2,525 lei from the state budget).

According to the National State Pension Fund, 1,381 pensioners benefited from Law 83/2015 amending Law 223/2007 on the status of professional civil aviation personnel in civil aviation in Romania, and the average pension is 11,479 lei, of which 7,531 lei is paid from the state budget.

559 people received pensions for years of service for the beneficiaries of the Accounting Chamber, the average amount of which was 8,502 lei, of which 2,818 lei is the share of the state budget.

In addition, 1,662 pensioners benefited from Law 130/2015 on amendments to Law 567/2004 regarding the status of specialized support staff of courts and prosecutor’s offices, the average pension was 5,108 lei, of which 2,447 lei is paid from the state budget.

Annually, the gross amount of the above pensions for years of service is 1.7 billion lei, at the level of last year.

Military pensions are included in the category of special pensions, i.e. those received under special laws, in public discourse. The latter make up the bulk, i.e. about 180 thousand. This includes pensions of those who worked in MAi, MApN and SRI and receive payments from their retirement homes

There are 97,000 beneficiaries at the MAI level, costing 5.2 billion lei annually.

There are about 78,000 beneficiaries at the MAPN level, while about 5,700 come from SRI, SIE and STS. Last year, the value of their pensions was about 4 billion lei.