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Pensioners' organisation: Inflation-pegged pension rises will drive retirees below poverty line

gov.ro
Raluca Turcan

The "Unirea" National Federation of Romanian Pensioners (FNUPR) calls out Labor Minister Raluca Turcan over the gap between the planned pension pegging to inflation (2 - 3 percent) and the rapid surge of food, medicines and utility prices by 10 - 20 percent, which will bring pensioners below the poverty line.

"Regarding point 4 of the document of the Pensioners' Federations presented to you today, 'the urgent establishment of measures to recover the amounts from social security contributions paid by employees and not transferred by employers (9 billion lei in 2020)'. We bring to your attention the execution account for the 9-month state social security revenues in 2020, which shows that out of 72.2 billion lei in contributions withheld by the employers from the employees, only 59.9 billion lei were transferred to the social security budget. For 9 billion lei left unpaid by employers, the Tax Management Agency did not resort to forced execution, as required by the tax code in force, and 3.8 billion lei remained overdue, adding to the arrears at the end of 2019 and taking the total amount to 22.3 billion lei," reads the document.

"Undeclared work too has a major negative influence on the budget. In addition, out of the total contributions collected, 6.7 billion lei were transferred to the 7 privately managed pension funds, without this being a priority. Balancing these revenue shortages required a state budget subsidy of 9.5 billion lei," the document notes.

The Federation mentions that other countries, including Hungary and Poland, which have pensions twice as high as Romania's, have given up this system.

"In fact, this is one of the reasons why Romanian retirees have the lowest pensions in the EU after Bulgaria, as Romania allocates just 7 percent of GDP, compared to the EU average of 14 percent. We consider it necessary and important that Romanian institutions, the Ministry of Labor and Social Protection in particular, define a vision for the approximation of pensions to the EU average. The inflation-pegged pension rise (2 - 3 percent) as you plan to do it, while prices for food, medicines and utilities are soaring sharply by 10 - 20 percent, will drive the pensioners below the poverty line. As a matter of fact, this system was already applied in 2010, which was followed by three years of zero growth and then increases by 3.7 percent, 4 percent and 5 percent; this situation required remedial measures and that's how it came to the increases provided for by Law 127/2019," the cited document reads.

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