EUROPE - Central and Eastern European (CEE) countries should tackle pensions first when it comes to structural reforms , according to a representative of the International Monetary Fund (IMF). And Romania is taking its first step.


Speaking at the annual CEE Forum in Vienna, Austria this week, Jeffrey Franks, adviser at the European Department of the IMF, said: "The most important reform step countries in the CEE region have to take is to reform their pension system.

"European countries share a common problem of ageing but in some CEE countries birthrates are even lower and there is emigration as well," he explained.

While many countries in the region have already introduced a mandatory second pillar, in some cases the state pension system is still ill-equipped to remain sustainable over the long-term.

Other participants in the panel discussion including representatives from Serbia, Slovakia and Romania, all of whom agreed that pensions should be top on the agenda.

However, decision making might be hindered in the region this year as at least seven elections are set to go ahead in the region this year: Ukraine (Jan-Feb 2010), Hungary, the Czech Republic, Slovakia (Spring 2010), Latvia, and Poland (Autumn 2010).

In Romania this year will see a reform of the first pillar, explained Andreea Paul Vass, personal advisor to the Romanian prime minister.

For the reform the actual retirement age, which currently is often below 50, will be tackled as well as the number of invalids (close to one fifth) with special pension arrangements, Vass told IPE.

Furthermore there will be no indexation of state pensions for 2010 and there might be a hike in the statutory retirement age as well. (See earlier IPE story: Romania aims for pension reforms by December

"There is no consensus on that last proposal yet but I think we will get there in the end," she pointed out.

In the second pillar contributions have been raised to 2.5% again - going back to the original schedule of increasing them every year after a crisis-induced freeze in 2009. (See earlier IPE story: Romania's mandatory pensions net 17.7%)

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