Romania : Pensions Policy Note
This report discusses pension reform which took place in 2001 as a result of deficits which began in the 1990s. Important changes included increasing retirement ages, and the introduction of a new point based benefit formula, taking into account th...
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| Format: | Policy Note |
| Language: | English en_US |
| Published: |
Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2008/11/16797513/romania-pensions-policy-note http://hdl.handle.net/10986/18912 |
| Summary: | This report discusses pension reform
which took place in 2001 as a result of deficits which began
in the 1990s. Important changes included increasing
retirement ages, and the introduction of a new point based
benefit formula, taking into account the entire work history
of the employee, in order to strengthen the link between
contributions and benefits. These actions improved pension
system financial performance sufficiently to achieve a
slight surplus in 2006 and 2007. Despite progress in pension
system reforms, the combination of recent increases in
benefit levels, the aging of the population, and the absence
of a rule for benefit indexation has once again brought the
system s long term financial sustainability into question.
Some other challenges: high contribution rates spur the
growth of informal employment; low retirement ages increase
fiscal pressures; and the possibility of generous early
retirement provides incentive for workers to leave formal
sector employment. The report suggests several policy
options to improve the pension situation, the first of which
is to increase the retirement age. The report ends with annexes. |
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