Romania’s ruling coalition promises to eliminate unfairness with new Pension Law
The Chamber of Deputies of Romania, as the decision-making body, endorsed on November 20 the new Pension Law that aims to eliminate injustice by recalculating all individual pensions based on unitary principles.
As a result, the pensions are expected to rise by up to 80% (in the case of very low pensions) as of September 2024, which poses significant fiscal risks unless the executive performs better than expected in boosting tax revenues.
The ruling coalition of Liberals (PNL) and Social Democrats (PSD), with very few individual exceptions such as former prime minister Florin Citu (PNL) in the Senate, backed the bill that eventually received 199 votes against 39 in the Chamber of Deputies, Economedia.ro reported. In addition, 15 deputies abstained.
Opposition party USR rejected the bill as unsustainable, very likely to result in either postponement of its implementation or supplementary taxation. The bill is only for electoral purposes, the opposition argued.
The recalculation of the pensions is expected to generate supplementary costs of 3% of GDP in 2025, according to sources within the executive.
The International Monetary Fund (IMF) reportedly recommended Romania re-assess the impact of the new Pension Law, estimated to result in a supplementary 1%-of-GDP fiscal deficit despite all the corrective measures aimed at boosting revenues.
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