Expert-Grup

Effective Measures and Political Will Can Save Moldova's Public Pension System from Collapse

Tuesday, 9 June 20157801 views
Effective Measures and Political Will Can Save Moldova's Public Pension System from Collapse

Automatically translated summary. The full article is available in Romanian.

A new study published by the Independent Think Tank “Expert-Grup” and authored by Adrian Lupușor finds that Moldova's public pension system is unsustainable both financially and socially. It sets out a package of reforms covering contributions, indexation, the retirement age, multi-pillar pensions and the fight against informal employment.

The State Social Insurance Budget runs a structural deficit of about 1% of GDP, and total spending is around 11% of GDP, higher than in regional countries. The average pension does not cover the subsistence minimum, and the pension-to-average-wage ratio is the lowest in the region. Emigration, the shadow economy, envelope wages and population ageing worsen the problem: contributors per pensioner fell from 1.3 in 2006 to 1.2 in 2014, against an international minimum of 4.

Expert-Grup recommends broadening contributions, indexing pensions to consumer prices twice a year, abolishing privileged pensions, and raising women's retirement age from 57 to 62 and the required contribution period from 30 to 35 years. It proposes creating Pillar II from 2020 and strengthening Pillar III immediately. Informal employment must be tackled through higher fines, less cash use and lower formal-employment costs. The reform must be comprehensive and involve many institutions.

View the original article in Romanian