EC says Romania must observe its commitments and reform the pension system

In a response to Romanian media, the European Commission (EC) confirmed that the Government must amend the "special" pensions (including the military pensions) by the end of the year and endorse a new public pension law to include automatic stabilisers triggered in case the overall public pensions exceed 9.4% of GDP.

The answer seems to invalidate the claims of prime minister Nicolae Ciuca, who said that the 9.4%-of-GDP threshold would be replaced with a "financial discipline indicator" following his talks with EC officials, according to Mediafax.

Furthermore, PM Ciuca argued that the military pensions, which account for the bulk of the special pensions in terms of expenditures from the central government budget, are not going to be amended since the World Bank (WB) discourages such a step and such military pensions (not fully based on recipients' contributions) are a practice in all EU and NATO countries.

"A specific stage (215), which must be completed by the end of 2022, refers to the review of the special pensions, which include military pensions. This is part of the broader reform of the public pension system, which is a key element of Romania's PNRR. The satisfactory completion of this stage will be evaluated in the context of the third payment request", sources from the European Commission told News.ro.

As regards the broad public pension system (which, according to the PMRR document, includes the 9.4%-of-GDP threshold during 2022-2070), EC representatives confirmed that they "expect Romania to continue working on the implementation of this reform, which we will evaluate in the context of Romania's future payment requests."

andrei@romania-insider.com

(Photo source: Designer491/Dreamstime.com)

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EC says Romania must observe its commitments and reform the pension system

In a response to Romanian media, the European Commission (EC) confirmed that the Government must amend the "special" pensions (including the military pensions) by the end of the year and endorse a new public pension law to include automatic stabilisers triggered in case the overall public pensions exceed 9.4% of GDP.

The answer seems to invalidate the claims of prime minister Nicolae Ciuca, who said that the 9.4%-of-GDP threshold would be replaced with a "financial discipline indicator" following his talks with EC officials, according to Mediafax.

Furthermore, PM Ciuca argued that the military pensions, which account for the bulk of the special pensions in terms of expenditures from the central government budget, are not going to be amended since the World Bank (WB) discourages such a step and such military pensions (not fully based on recipients' contributions) are a practice in all EU and NATO countries.

"A specific stage (215), which must be completed by the end of 2022, refers to the review of the special pensions, which include military pensions. This is part of the broader reform of the public pension system, which is a key element of Romania's PNRR. The satisfactory completion of this stage will be evaluated in the context of the third payment request", sources from the European Commission told News.ro.

As regards the broad public pension system (which, according to the PMRR document, includes the 9.4%-of-GDP threshold during 2022-2070), EC representatives confirmed that they "expect Romania to continue working on the implementation of this reform, which we will evaluate in the context of Romania's future payment requests."

andrei@romania-insider.com

(Photo source: Designer491/Dreamstime.com)

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