Romania sets out 2005 pension measures
ROMANIA – The government has laid out the measures it will implement in 2005 to ensure pension sustainability.
“In 2005 we will implement several measures to ensure the sustainability of the pension system,” said Prime Minister Adrian Nastase and National Bank of Romania governor Mugur Isarescu.
“Already in August 2004, we decided that, starting with 2005, pensions are adjusted only once per year in January, by the rate of projected average inflation in the year,” they stated in a letter to the International Monetary Fund.
“In January 2005, the adjustment will be exceptionally limited to three percent, owing to the already implemented adjustments in 2004.”
And they added that the government would implement legislation on the retirement age. “By April 2005, we will approve amendments to the Pension Law that will accelerate the increase in the retirement age starting on July 1 2005.”
And from the start of next year, the pensions for farmers – who were previously insured under the former agricultural pension system – will be paid from the state budget.
And extra spending of lei 2.9 billion would be allocated to the pension fund to compensate for less-than-full CPI-indexation for pensioners that retired before April 1 2001 and the change in the indexation scheme in 2005.
The officials said: “Specifically, pensions will be increased by 5.25% for pensioners who retired under law 3/1997 and who receive a pension lower than three times the average gross economy-wide wage. The increase in pensions will be accompanied by shifting the indexation entirely to a CPI basis.”
In June the government said it cut the employers' pension fund contribution rate by 2.5 percentage points.
It added: “Taking into account the need to consolidate the pension fund, we are determined not to exceed the scheduled increase in pensions and the pension expenditures in the 2004 budget.
“To ensure the medium-term sustainability of the public pension system, we will agree with the World Bank in the context of the Programmatic Adjustment Loan operation to accelerate the increase in the retirement age and to start the equalization of the retirement age for men and women starting with July 1, 2005.”