The retirement system in Moldova lacks financial sustainability, study

Three years after the reform, the retirement system in the Republic of Moldova remains deprived of long-term financial sustainability. Due to the aging of the population and the migration of the workforce, over the next few years there is a risk that fewer people will contribute to the social insurance budget. The opinions were expressed in a public debate, in which a study was presented with the results of the three years of reform. The event was organized by the Friedrich Ebert Stiftung Moldova Foundation and the WatchDog.MD Community, IPN reports.

Nelea Rusu, author of the study, mentioned that the new system of granting pensions has brought new conditions of retirement, new ways of calculating the benefits, valorisation, recalculation of pensions. But the social insurance principles have remained unchanged. The mandatory social insurance of natural persons who own or lease land has not been resumed. Reaching retirement age, these people, who now voluntarily pay social insurance, will not meet the conditions of the contribution period, because they do not actively participate in social insurance system.

Oleg Tofilat, co-author of the study, noted that the retirement system has a growing remuneration fund. According to him, the average wage increases, the number of employees remaining constant, the black economy is shrinking while the retirement age has risen. However, the contributions to social insurance have decreased, the number of pensioners is on a rise, people are migrating so that there is no one left to contribute to the social insurance budget.

Sergiu Sainciuc, a reviewer of the study, mentioned that, three years ago, when the reform was under way, the employee-pensioner ratio was one to one. Now, according to new data provided by the National Bureau of Statistics, the ratio is even lower. In Sergiu Sainciuc's opinion, the tax base must be broadened in order to ensure that the pensions will be paid on time and in full size further. "This is our future. We need to provide incentives to young people so that they stay in the country, creating decent jobs for them”, says Sergiu Sainciuc.

The law on the pension system reform, approved in 2016, establishes a new formula for calculating pensions. It also provides for the equalization of the retirement age (63 years) and the contribution period (34 years) for women and men. The early retirement pension can be requested three years earlier if the contribution period is fulfilled.