Romania Ups Pension Point 3% To RON718.4 As Of April 1

The Romanian government decided late January to increase public pensions by 5%, in two stages. The gross average wage used to calculate the 2009 social security budget was RON1,693.

Labor minister Marian Sarbu said at that time the 5% increase takes public pensions to 43.2% of the country’s gross average salary, instead of the 45% stipulated in the governing program.

Romanian pensioners protested last Thursday to the fact that the pension point will no longer be 45% of the gross average wage as of April. They also urged the labor minister to increase the taxation ceiling for pensions to RON1,500 or even RON1,700 from the current RON1,000.

The government will change the calculation of pensions and increase them depending on the annual inflation rate instead of the gross average wage, to balance the country’s public pension fund on the medium and long term under Romania’s agreement with the International Monetary Fund, or IMF.

The change will be introduced in the following years, but the change won’t have immediate effects as authorities aim to stabilize the public pension system in the long run.

Under the current system, pensions are calculated at the beginning of each year depending on the average gross salary for the respective year calculated by the country’s National Forecast Commission, or CNP. The commission’s mot recent forecast sees the average gross salary up 5.8% this year, to RON1,693.

However, pensions increased significantly as the pension point was raised gradually from 31% of the gross average wage in 2007 to 37.5% of the gross average wage mid-2008.