Reforming the pension system – an absolute necessity for the Moldovan society

Tuesday, November 15, social partners, national and international experts, gathered in Chisinau at a roundtable entitled “For a fair, sustainable and transparent pension system in Moldova” to discuss the reform due to take place in this area. The event was organized by Friedrich Ebert Stiftung Foundation.

After August 2016, the Government approved the concept of reforming the pension system, announcing that it will be implemented from the 1^st of January 2017, that fact has aroused many debates about streamlining the pension system, funding mechanisms, formula for calculating retirement age, aspects related to the demographic evolution, opportunity to reform pension system.

The purpose of the roundtable was to provide a platform for discussions in order to ensure an inclusive and transparent process in reforming the pension system, determining priorities of reforming the given system and presentation of the position of international experts, the Moldovan Government, trade unions and non-governmental organizations.

Ana Mihailov, program coordinator of the Friedrich Ebert Stiftung Foundation in Moldova, mentioned that the current pension system is not transparent, unsustainable and inequitable, the population criticizes the calculation of pensions, and to overcome the situation there is the need for more interventions from government.

Martin Hutsebaut expert in the pension system of the International Trade Union Confederation (ITUC), conducted a comprehensive analysis of the pension system in Moldova, presented various models and approaches in the discussed field, applied in several countries in the European Union and expounded his vision of reforming the pension system in our country.

“Although life expectancy at birth in 2015 in Moldova was very low, being about 67.9 years for men and 76.2 for women, gradually increasing the retirement age is a key element in reforming the pension system so that by 2028 the retirement age to be the same for women and men 63 years”, says the ITUC expert.

According to Hutsebaut, Moldova must develop a complementary system of pensions, to implement a more flexible pension system for people who want to work when they reach retirement age to be able to continue working if they think they can meet the requirements of employers.

Nelea Russu, head of Policy Insurance Directorate, Ministry of Labour, Social Protection and Family, said that the overall objective of the pension reform is to ensure a fair and sustainable pension system, guaranteeing a decent life to pension beneficiaries.

Government’s representative informed that in May 2016 was created a working group to develop the Concept of reforming the pension system, which included social partners, representatives of ministries and experts.

“The main challenges that we have to face relate to the complicated demographic situation, financial instability, inequity in determining pensions and redistribution of funds, low replacement rate and, not least, the low pensions a good part of the population receive,” highlighted Nelea Russu.

During the talks, Nelea Russu also said that it is necessary to create an electronic system accessible to anyone who wants to know what will be the pension they will receive when reaching retirement age.

In turn, Sergiu Sainciuc, vice president of CNSM, said that the proposals of trade unions largely have been taken into account when developing the concept of reforming the pension system and came up with a series of recommendations to help create an efficient, sustainable and transparent system.

They relate to the establishment of the basic pension for all recipients of for old-age pensions and disability pensions.

“It is necessary to set the right to early retirement pension and recalculation for pensioners who continue to work and the right to extend the list of non-contributory periods, to be included in the contribution period”, said Sergiu Sainciuc.

However, Sergiu Sainciuc informed about the non-acceptance by the members of the Confederal Committee of CNSM of the intention to increase the retirement age for men and women.

CNSM vice president also mentioned the need for indexation, combating the informal economy and the payment of wages “in envelopes”, simplifying the formula for calculating pensions, so as to be comprehensible.

According to Adrian Lupuşor, executive director of Expert-Grup, the public pension system is not sustainable financially and socially, and is subject to arbitrary political interference that put the system under weak conditions and the pension system reform should be conducted in parallel with tax system reform.

“According to a survey conducted by Expert-Grup, about 71% of the population does not believe that the pension system is fair. The vast majority of the population, 93.7% believes that the pension is not enough to survive and only 51% of the population believes that the payment of social insurance contributions is needed “, said Adrian Lupuşor.

In other views, Viorica Antonov, the economic expert of IDIS “Viitorul”, proposed the draft to reform the pension system not to be passed now, but reconsidered because there have not been performed sufficient analysis.

“All these proposals related to reforming the pension system do not have a clear financial coverage does not correspond to the socio-economic, demographic and migration and will arouse discontent among the population if adopted in a hurry”, said Viorica Antonov.

“On reforming this complex and very sensitive system to the whole population has been discussed for a long time, and the implementation of reforms, which have all been postponed for various reasons, need more time. The proposals discussed at the roundtable will be carefully analysed and will be soon made public the draft that refers to reforming the pension system “, added Mircea Buga, adviser to Prime Minister Pavel Filip.

Roundtable participants emphasized attention on the need to better inform the population about the pension system reform, so that people know why it would benefit them.

According to the National Social Insurance House of Moldova, on November 1 2016, 688 579 pensioners were registered, of which 156 232 continue to be employed. Of the total number of pensioners, 457 418 are women and 230 661 men and 528 977 the total number of beneficiaries of old age pension, 372 502 are women (70.4%) and 156 475 men (29.6%).

Participants agreed on the accumulation and systematization of the final proposals on reforming the pension system and submit them for consideration to the institutions responsible for implementation.

Department of mass media and international relations