Romanian Govt OKs Pension Reform

At the end of the Cabinet meeting, Prime Minister Emil Boc confirmed the act was approved.

He said the law is needed so that Romania can continue to pay pensions because the current system is unsustainable and the country would have to borrow billions of euros in a few years just to pay public pensions if the current system were kept. The prime minister reminded the country had to take money from the state budget to cover its pensions budget both in 2009 and 2010.

Under the new pension law, special pensions, such as those of lawmakers military, law enforcement and intelligence services staff, will be recalculated and therefore reduced. Boc said the recalculation of special pensions would generate savings of EUR500 million to EUR800 million.

The prime minister said Tuesday special pensions would be recalculated within five months starting with the coming into force of the unitary pension system law, without any exceptions, but considering the fact that the state has borne some of the social contributions for certain categories.

"Special pensions will be recalculated with respect for the contribution principle, without any exceptions," Boc said Tuesday.

Asked by media what would happen with the pensions of police officers, Boc said pensions of law enforcement staff will be recalculated, but contributions paid by the state to their pensions would be taken into account.

Romanian unionists said the unitary public pension law should not be applied retroactively, as the normative act states, adding there might be several lawsuits on this matter, since no other laws have been applied retroactively.

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