IMF: Romanian Govt Undertook To Revise Pension Laws Until Dec 31

"A significant source of fiscal pressure over the medium term is the cost of future pension obligations. To address this, we will reform key parameters of the pension system, in coordination with the World Bank," according to the letter of intent signed by Romanian finance minister Gheorghe Pogea and the central bank governor Mugur Isarescu, and sent to the managing director of the International Monetary Fund, Dominique Strauss-Kahn.

Changes will include indexing pensions to consumer prices rather than to wages and limiting the scope for discretionary pension increases, according to the letter made public Wednesday.

Furthermore, groups of public employees currently excluded from pension contributions will have such contributions phased-in.

"We will also continue gradual adjustment of the retirement age beyond the currently agreed schedule, particularly for women, taking into account the evolution of life expectancies, to allow for greater financial stability of the system, as well as to ensure that retirement parameters are more in line with EU practices," according to the letter of intent.

Moreover, to protect vulnerable pensioners, the Romanian government undertook to make efforts to boost targeted poverty support programs that would improve living standards.

The government will also continue to phase in the second pillar of the pension system, with regularly scheduled increases in contributions, as originally envisaged.

The program agreed with the IMF staff aims reforming the parameters of the pension system for tighter control on expenditure and a significant reduction in deficit.