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Romanian court rejects pension reforms, as Greece ratifies theirs

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EUROPE - The Romanian Constitutional Court this afternoon rejected planned reforms of the pension system as unconstitutional in a move that could endanger a €2bn bailout by the International Monetary Fund (IMF).

As part of a larger austerity package, the Romanian government was hoping to reduce public sector bills by cutting salaries by a quarter and pensions by 15%.

However, the proposals were contested, leading to an investigation by the country’s highest court into five issues.

It upheld two of the five complaints, one relating to the 15% cut to pensions and another specifically relating to the recalculation of magistrates’ pensions.

While a full verdict is expected on Monday, it means prime minister Emil Boc, who already narrowly defeated a vote of no confidence over the cuts, will face further uncertainty.

Meanwhile, the disputed Greek pension reforms have received cabinet approval.

Changes will include raising the full retirement age to 65, as well as cutting individual pension payments in an effort to cut down the 12% of GDP spent on pensions annually.

Plans to reform the system had drawn widespread protests from unions, but were necessary in light of Greece’s growing deficit that led to a recent €110bn bailout by other euro member countries.

Currently, it is estimated 2.6 million Greeks are retired, meaning almost a quarter of the population is reliant on pensions.

Without the current reforms, projections had the country spending 25% of its GDP on pensions by 2050.

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  • Romanian court rejects pension reforms, as Greece ratifies theirs

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  • QN-2546

    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
    Size: Total CHF 600m, approx. CHF 100-300m per fund investment.
    Closing date: 2019-06-28.

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