Romania's Pension Sys Affected By Population Ageing, Black Market LaborPublish date: 15-03-2009
Romania's pension system will be seriously affected on the long run by the low number of contributors in ratio with beneficiaries, the low employment rate among elderly workers and the expansion of the black market labor, according to a report of the European Commission.
The Commission also said the Romanian authorities took concrete measures to tackle challenges and problems in the pension sector. Thus, they increased both the minimum payment period of contributions, to 15 years from previous 10 years, and the minimum retirement period, to 60 years old from previous 57 years old, for woman, and to 65 years old from previous 62 years old, for men, by 2014, as well as measures aiming to back employment among elderly people.
According to the Commission, early retirement systems adopted throughout the first decade of transition significantly increased the number of pensioners, while the early retirement policy, aimed at solving the rising unemployment rate problem, reduced the average retirement age.
The report also said the number of contributors for each pensioner lowered to 0.79 in 2003 from 3.43 in 1990, while pension costs, as percentage of the gross domestic product, lowered during the same period down to 6.5% from previous 7.2%.
Statistics indicate Romania's employment rate is way behind the EU average (58.8% compared with 65.4% in 2007).
The EC report also refers to the public pension systems of other EU member states, as well as the impact of the economic crisis on private pensions.
The report concludes there is no evidence that private pension funds have significant direct investments in the kind of toxic assets that have caused problems for banks and others.
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