Romanian Govt Mulls Freezing High Pensions Prior To Drafting New Pension Law – Sources

They said there are several variants that must be analyzed in order to draft the new pension law, adding their application entails "special treatments" for current special pensions.

 

Furthermore, the group of experts working on the new pension law also looks into the possibility of taxing certain sums. However, no taxation level or a certain taxation cap have been established so far.

 

"The law is highly complex because it must consider several factors and the terms imposed in the lending agreement with the International Monetary Fund (IMF), which stipulates the completion of the draft law until the end of the year," the same sources said.

 

Furthermore, the issue of invalidity pensions, which saw a 50% hike from 2000 until now, to 900,000 beneficiaries from nearly 600,000, must also be tackled prior to drafting the new pension law.

 

The government also looks into establishing pensions in ratio with contributions to the social security budget or levying a tax computed in ratio with the sum granted under special laws and which tops the value of contribution paid during one’s professional activity.

 

Late May 2009, the government approved the principles which will be the base of the new unitary public pension system, deciding that the principle of mandatory occupational pensions be regulated by the Private Pension System Supervision Commission (CSSPP).

 

The first principle is oneness, according to which the state will set up and guarantee the system based on the same laws. The system will cover every professional category, and the pension will be computed based on contribution’s amount and time span.

 

The second principle is compulsoriness, namely, both legal entities and private individuals are obliged to take part in the public system, as social security rights are correlated with the fulfillment of obligations.

 

Another principle concerns contribution and stipulates that social security funds will be set up on the basis of contributions owned by legal entities and private individuals who take part in the public system.

 

The principle of equality will ensure non-discriminatory treatment as regards rights and obligations to all participants in the public system, enforcing the point that all pensions will be computed in the same manner for all employees. The principle of repartition says the funds will be redistributed for the payment of obligations to the public system. The principle of social solidarity says participants in the public system are under obligations and enjoy rights to prevent, limit or remove social risks provided by law. The principle of autonomy is based on the stand-alone management of the public system, taking into account its accordance with laws on classified information, by using insurance houses separate from structures which are under the effects of those laws.

 

The occupational principle, which will be set by the Private Pensions Supervision Commission, states that the introduction of additional occupational pension systems is mandatory. This new principle will allow any social-professional category to set up an additional pension system, with the manner of contribution, calculation and management to be fixed later through law.

 

“Every professional category is able to create occupational pensions. For instance, police officers, teachers, public servants and people in the military can contribute to this system and, ultimately, there will be two pensions. Still, there is a possibility that not all systems will have the financial resources to implement occupational pensions,” according to Labor Ministry adviser Mihai Seitan.