{"id":449632,"date":"2021-09-07T18:49:51","date_gmt":"2021-09-07T18:49:51","guid":{"rendered":"https:\/\/www.moldova.org\/en\/?p=449632"},"modified":"2021-09-07T19:00:34","modified_gmt":"2021-09-07T19:00:34","slug":"pensions-funding-dilemma-and-retirees-needs-in-the-republic-of-moldova","status":"publish","type":"post","link":"https:\/\/www.moldova.org\/en\/pensions-funding-dilemma-and-retirees-needs-in-the-republic-of-moldova\/","title":{"rendered":"Pensions&#8217; funding dilemma and retirees&#8217; needs in the Republic of Moldova -will the trade-off be accepted?"},"content":{"rendered":"<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 4<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span><p>Starting October 1, 183 thousand retirees with full contribution period, who receive a pension of less than 2000 lei at the moment, will benefit from this minimum level of payment.<\/p>\n<p>The Cabinet of Ministers of the Republic of Moldova meets on September 8 to adopt the indexation by 3.86% of social insurance benefits and state social benefits, but also the establishment of the minimum pension level of 2 000 lei. That was one of the promises the current government made during the previous election campaign.\u00a0It is <a href=\"https:\/\/www.privesc.eu\/arhiva\/96178\/Conferinta-de-presa-sustinuta-de-prim-ministrul-Republicii-Moldova-Natalia-Gavrilita--ministrul-Muncii-si-Protectiei-Sociale--Marcel-Spatari-si-deputa\">called<\/a> <em>&#8220;the largest pension increase in the history of the Republic of Moldova&#8221;<\/em> &#8211;\u00a0 from 1188 lei to 2000 lei.<\/p>\n<p><em>&#8220;The new changes will provide support to vulnerable retirees with the lowest pensions. 428 000 people will benefit from these increases,&#8221;<\/em> <a href=\"https:\/\/www.privesc.eu\/arhiva\/96178\/Conferinta-de-presa-sustinuta-de-prim-ministrul-Republicii-Moldova-Natalia-Gavrilita--ministrul-Muncii-si-Protectiei-Sociale--Marcel-Spatari-si-deputa\">said<\/a> Minister of Labor, <strong>Marcel Spatari<\/strong>. The minimum pension for those without full contribution period will increase on average by 398 lei, he also mentioned. Additionally, other social benefits (disability, care and supervision allowances) will increase as well. All in all, over 84 000 people will have increased allowances, and 34 000 persons with disabilities will receive higher payments.<\/p>\n<p>There are several dilemmas related to the increase of social benefits though. First of all, <span style=\"color: #993300;\">for the majority of aged population who receives employment-based pensions that is far from being enough for a decent life<\/span>, despite the official figures. A lot of elderly live without any relatives&#8217; support and don\u2019t have enough money for food, medicines, utilities or clothes, all the more for entertainment or travelling.<\/p>\n<p>According to the official <a href=\"https:\/\/statbank.statistica.md\/PxWeb\/pxweb\/ro\/30%20Statistica%20sociala\/30%20Statistica%20sociala__09%20PRO\/PRO010080trim.px\/?rxid=9a62a0d7-86c4-45da-b7e4-fecc26003802\">statistics<\/a> of the <strong>National Bureau of Statistics (NBS)<\/strong>, there are 686 251 beneficiaries of pensions in Moldova, being on record on January 1, 2021. 76.18% of them are represented by the retired persons who receive employment-based pensions, the average payment amount being<strong> 2067.5 le<\/strong>i. At the beginning of 2020, the amount of the <a href=\"https:\/\/statistica.gov.md\/newsview.php?l=ro&amp;idc=168&amp;id=6761\">official subsistence minimum<\/a> for general population in the Republic of Moldova was 2082.7 lei per month per person. The subsistence minimum for retired persons was calculated as being <span style=\"color: #993300;\">1765.9 lei<\/span>, that representing 84.8% of the previous figure.<\/p>\n<p>The second pensions&#8217; dilemma connects to their source of funding and the long-term financial stability of the overall social security system. As Prime Minister Natalia Gavrilita informed, <em>&#8220;the costs of pensions payment increase will be covered by this year&#8217;s budget accumulations, which have increased. It is the internal resources of the state that will be prioritized in such a way as to cover these expenses.&#8221;<\/em><\/p>\n<p>However, the decision has sparkled controversy among the opposition politicians and experts, being considered populist and unreal. According to some of them, because Government does not have the financial resources for such an increase, <span style=\"color: #993300;\">it will be made at the expense of external loans<\/span>, and this will destabilize the budget. <em>&#8220;In the first period, it can really work and it can create the impression that it is possible to reach this ceiling. Problems arise in the coming years, because the budget deficit will increase. [&#8230;] In two or three years, the state will be forced to borrow extra money, firstly to maintain this level of payments, and secondly it will borrow to refinance existing debts. This will lead to an increase in domestic debt and will create a financial pyramid which, over time, will put increasing pressure on the state budget,&#8221;<\/em> economic expert <strong>Roman Chirca<\/strong> <a href=\"https:\/\/sputnik.md\/20210906\/majorare-pensionari-pensie-2000-de-lei-expert-44542136.html\">believes<\/a>.<\/p>\n<p>Others believe the long-term financial stability of the social security system is real, but on certain conditions. <em>&#8220;Provided that, starting next year, the budget will have its own sources for this increase, not just external sources. This year, over 500 million dollars will be allocated from the IMF disbursement. In the future, however, a minimum of 3 billion lei will be needed annually, in addition to the existing budget. It is imperative for Government to ensure a robust growth of the national budget from domestic sources, by liquidating the schemes of state budget fraud and destabilizing the economy and by attracting new investments,&#8221;<\/em> <a href=\"https:\/\/www.zdg.md\/importante\/sondaj-pensii-mai-mari-de-la-1-octombrie-e-posibil-e-real\/\">claimed<\/a> the member of Dignity and Truth Platform Party, <strong>Alexandru Slusari<\/strong>.<\/p>\n<p>The indexation of 3.86% of all social benefits is also considered unethical by some civil society representatives. <em>&#8220;We have been talking for years about the <span style=\"color: #993300;\">differentiated indexation<\/span> of pensions and all was in vain. We clash with the interests of those with high pensions. How fair are these 3.86% for a pension of 1000 lei and for pensions of 10, 15, 30 thousand and more? Do you feel the difference?&#8221;<\/em> <a href=\"https:\/\/www.zdg.md\/importante\/sondaj-pensii-mai-mari-de-la-1-octombrie-e-posibil-e-real\/\">wondered<\/a> President of the Pensioners&#8217; Union, <strong>Victor Leanca<\/strong>.<\/p>\n<p><span style=\"color: #993300;\"><strong>People in Moldova don&#8217;t want to retire in Moldova<\/strong><\/span>. Low pensions, corruption, poor social care and medical services are just one side of the problem. There are also no programs for active aging, business grants for seniors, entertainment activities for seniors, campaigns to fight aging discrimination and marginalisation.<\/p>\n<p>What is more, Moldova doesn&#8217;t have a <span style=\"color: #993300;\">retirement visa program<\/span> for foreigners who would work their entire lives in one country, and when they reach retirement age they would move to another country to have a greater purchasing power and ensure a decent living. Spain, Portugal, Greece, Croatia Albania or Montenegro are just some countries that do have such programs.<em> &#8220;At the moment, if a person over the EU retirement age would like to live in Moldova for a few years, he doesn&#8217;t have any legal way to do it. He would have to start a fictitious business or resort to other tricks with the risk of corruption,&#8221;<\/em> <a href=\"https:\/\/alaiba.md\/2021\/03\/02\/viza-de-pensionare-in-moldova-initiativa-legislativa\/\">explained<\/a> the MP <strong>Dumitru Alaiba<\/strong>.<\/p>\n<p>Retirees (indigenous or foreign) who have a decent standard of living are bringing obvious benefits to the state they are residing in: a population that would spend more, be more active, create businesses, travel more, share their expertise for longer, be happy and vote responsibly can only be useful. And that is especially important when one fifth of the country&#8217;s population is aged 60 years and over, that figure continuously increasing.<\/p>\n<p>See also: <a href=\"https:\/\/www.moldova.org\/en\/what-does-it-mean-to-be-a-retired-person-in-the-republic-of-moldova\/\">Earning less than spending or what does it mean to be a retired person in the Republic of Moldova?<\/a><\/p>\n<p>Photo: unknown<\/p>\n","protected":false},"excerpt":{"rendered":"<p><span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 4<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span>Starting October 1, 183 thousand retirees with full contribution period, who receive a pension of less than 2000 lei at the moment, will benefit from this minimum level of payment. The Cabinet of Ministers of the Republic of Moldova meets on September 8 to adopt the indexation by 3.86% of social insurance benefits and state [&hellip;]<\/p>\n","protected":false},"author":31,"featured_media":449633,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,56],"tags":[474,1127,35,27,520,1125,518,1126],"class_list":["post-449632","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-society","category-reportaje","tag-budget","tag-dilemma","tag-important","tag-moldova","tag-pension","tag-retirees","tag-retirement","tag-social-security"],"content_social_share":"<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 4<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span><p>Starting October 1, 183 thousand retirees with full contribution period, who receive a pension of less than 2000 lei at the moment, will benefit from this minimum level of payment.<\/p>\n<p>The Cabinet of Ministers of the Republic of Moldova meets on September 8 to adopt the indexation by 3.86% of social insurance benefits and state social benefits, but also the establishment of the minimum pension level of 2 000 lei. That was one of the promises the current government made during the previous election campaign.\u00a0It is <a href=\"https:\/\/www.privesc.eu\/arhiva\/96178\/Conferinta-de-presa-sustinuta-de-prim-ministrul-Republicii-Moldova-Natalia-Gavrilita--ministrul-Muncii-si-Protectiei-Sociale--Marcel-Spatari-si-deputa\">called<\/a> <em>&#8220;the largest pension increase in the history of the Republic of Moldova&#8221;<\/em> &#8211;\u00a0 from 1188 lei to 2000 lei.<\/p>\n<p><em>&#8220;The new changes will provide support to vulnerable retirees with the lowest pensions. 428 000 people will benefit from these increases,&#8221;<\/em> <a href=\"https:\/\/www.privesc.eu\/arhiva\/96178\/Conferinta-de-presa-sustinuta-de-prim-ministrul-Republicii-Moldova-Natalia-Gavrilita--ministrul-Muncii-si-Protectiei-Sociale--Marcel-Spatari-si-deputa\">said<\/a> Minister of Labor, <strong>Marcel Spatari<\/strong>. The minimum pension for those without full contribution period will increase on average by 398 lei, he also mentioned. Additionally, other social benefits (disability, care and supervision allowances) will increase as well. All in all, over 84 000 people will have increased allowances, and 34 000 persons with disabilities will receive higher payments.<\/p>\n<p>There are several dilemmas related to the increase of social benefits though. First of all, <span style=\"color: #993300;\">for the majority of aged population who receives employment-based pensions that is far from being enough for a decent life<\/span>, despite the official figures. A lot of elderly live without any relatives&#8217; support and don\u2019t have enough money for food, medicines, utilities or clothes, all the more for entertainment or travelling.<\/p>\n<p>According to the official <a href=\"https:\/\/statbank.statistica.md\/PxWeb\/pxweb\/ro\/30%20Statistica%20sociala\/30%20Statistica%20sociala__09%20PRO\/PRO010080trim.px\/?rxid=9a62a0d7-86c4-45da-b7e4-fecc26003802\">statistics<\/a> of the <strong>National Bureau of Statistics (NBS)<\/strong>, there are 686 251 beneficiaries of pensions in Moldova, being on record on January 1, 2021. 76.18% of them are represented by the retired persons who receive employment-based pensions, the average payment amount being<strong> 2067.5 le<\/strong>i. At the beginning of 2020, the amount of the <a href=\"https:\/\/statistica.gov.md\/newsview.php?l=ro&amp;idc=168&amp;id=6761\">official subsistence minimum<\/a> for general population in the Republic of Moldova was 2082.7 lei per month per person. The subsistence minimum for retired persons was calculated as being <span style=\"color: #993300;\">1765.9 lei<\/span>, that representing 84.8% of the previous figure.<\/p>\n<p>The second pensions&#8217; dilemma connects to their source of funding and the long-term financial stability of the overall social security system. As Prime Minister Natalia Gavrilita informed, <em>&#8220;the costs of pensions payment increase will be covered by this year&#8217;s budget accumulations, which have increased. It is the internal resources of the state that will be prioritized in such a way as to cover these expenses.&#8221;<\/em><\/p>\n<p>However, the decision has sparkled controversy among the opposition politicians and experts, being considered populist and unreal. According to some of them, because Government does not have the financial resources for such an increase, <span style=\"color: #993300;\">it will be made at the expense of external loans<\/span>, and this will destabilize the budget. <em>&#8220;In the first period, it can really work and it can create the impression that it is possible to reach this ceiling. Problems arise in the coming years, because the budget deficit will increase. [&#8230;] In two or three years, the state will be forced to borrow extra money, firstly to maintain this level of payments, and secondly it will borrow to refinance existing debts. This will lead to an increase in domestic debt and will create a financial pyramid which, over time, will put increasing pressure on the state budget,&#8221;<\/em> economic expert <strong>Roman Chirca<\/strong> <a href=\"https:\/\/sputnik.md\/20210906\/majorare-pensionari-pensie-2000-de-lei-expert-44542136.html\">believes<\/a>.<\/p>\n<p>Others believe the long-term financial stability of the social security system is real, but on certain conditions. <em>&#8220;Provided that, starting next year, the budget will have its own sources for this increase, not just external sources. This year, over 500 million dollars will be allocated from the IMF disbursement. In the future, however, a minimum of 3 billion lei will be needed annually, in addition to the existing budget. It is imperative for Government to ensure a robust growth of the national budget from domestic sources, by liquidating the schemes of state budget fraud and destabilizing the economy and by attracting new investments,&#8221;<\/em> <a href=\"https:\/\/www.zdg.md\/importante\/sondaj-pensii-mai-mari-de-la-1-octombrie-e-posibil-e-real\/\">claimed<\/a> the member of Dignity and Truth Platform Party, <strong>Alexandru Slusari<\/strong>.<\/p>\n<p>The indexation of 3.86% of all social benefits is also considered unethical by some civil society representatives. <em>&#8220;We have been talking for years about the <span style=\"color: #993300;\">differentiated indexation<\/span> of pensions and all was in vain. We clash with the interests of those with high pensions. How fair are these 3.86% for a pension of 1000 lei and for pensions of 10, 15, 30 thousand and more? Do you feel the difference?&#8221;<\/em> <a href=\"https:\/\/www.zdg.md\/importante\/sondaj-pensii-mai-mari-de-la-1-octombrie-e-posibil-e-real\/\">wondered<\/a> President of the Pensioners&#8217; Union, <strong>Victor Leanca<\/strong>.<\/p>\n<p><span style=\"color: #993300;\"><strong>People in Moldova don&#8217;t want to retire in Moldova<\/strong><\/span>. Low pensions, corruption, poor social care and medical services are just one side of the problem. There are also no programs for active aging, business grants for seniors, entertainment activities for seniors, campaigns to fight aging discrimination and marginalisation.<\/p>\n<p>What is more, Moldova doesn&#8217;t have a <span style=\"color: #993300;\">retirement visa program<\/span> for foreigners who would work their entire lives in one country, and when they reach retirement age they would move to another country to have a greater purchasing power and ensure a decent living. Spain, Portugal, Greece, Croatia Albania or Montenegro are just some countries that do have such programs.<em> &#8220;At the moment, if a person over the EU retirement age would like to live in Moldova for a few years, he doesn&#8217;t have any legal way to do it. He would have to start a fictitious business or resort to other tricks with the risk of corruption,&#8221;<\/em> <a href=\"https:\/\/alaiba.md\/2021\/03\/02\/viza-de-pensionare-in-moldova-initiativa-legislativa\/\">explained<\/a> the MP <strong>Dumitru Alaiba<\/strong>.<\/p>\n<p>Retirees (indigenous or foreign) who have a decent standard of living are bringing obvious benefits to the state they are residing in: a population that would spend more, be more active, create businesses, travel more, share their expertise for longer, be happy and vote responsibly can only be useful. And that is especially important when one fifth of the country&#8217;s population is aged 60 years and over, that figure continuously increasing.<\/p>\n<p>See also: <a href=\"https:\/\/www.moldova.org\/en\/what-does-it-mean-to-be-a-retired-person-in-the-republic-of-moldova\/\">Earning less than spending or what does it mean to be a retired person in the Republic of Moldova?<\/a><\/p>\n<p>Photo: unknown<\/p>\n<div class='heateorSssClear'><\/div><div  class='heateor_sss_sharing_container heateor_sss_horizontal_sharing' data-heateor-sss-href='https:\/\/www.moldova.org\/en\/pensions-funding-dilemma-and-retirees-needs-in-the-republic-of-moldova\/' data-heateor-sss-no-counts=\"1\"><div class='heateor_sss_sharing_title' style=\"font-weight:bold\" ><\/div><div class=\"heateor_sss_sharing_ul\"><a aria-label=\"Facebook\" class=\"heateor_sss_facebook\" 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