The Romanian government is coming under sustained pressure to implement urgently needed reform of its iniquitous social security system and introduce funded pension schemes in order to relieve crippling poverty amongst the country's pensioners. And Romanian pensions lobbyists also feel guaranteed basic retirement provision for future generations is in serious danger if change does not come quickly.
Legislation proposals are currently before parliament to place around 30% of the present social insurance tax of 23% of wages, into Universal Pension Funds (UPF) entrusted to 10 private companies under state authorisation and supervision. The idea is to foster competition between the companies and introduce investment efficiency to a system which currently makes no use of capital markets or supplementary retirement benefit. If the funded pensions law comes into force, employees with at least 20 years before retirement will automatically become a contributor to an UPF of their choice.
In recent years the Romanian pensions system has been plagued by de-pression, with average retirement payments dropping from 45% of average earnings in 1993 to just 36% today. Gross disparities also exist between pensioners who retired pre and post the1990 revolution, and even more alarming is the ROL8,000bn (Ecu956m) owed to the government in social insurance by the country's giant industrial companies, which are showing no signs of paying up.
Miron Niculescu of the Romanian General Union of Pensioners, says: If there is no minimum pension rate im-plemented, then future retirees will have nothing but misery to look forward to."
Amelia Balazs and Hugh Wheelan"