Public pension fund runs risk of collapsing, expert

The reform of the pension system was suspended in 2002 for political reasons, while the current public pension system deprives the pensioners of the right to live guaranteed by the Constitution, says the Independent Analytical Center Expert-Grup, which analyzed the given sector, Info-Prim Neo reports. The low pensions have always been one of Moldova’s most acute problems. The pensioners are the most relevant example of a socially vulnerable group of people, said economic analysts Adrian Lupusor. “The constant aggravation of the demographic situation and the short and long-term forecasts on this could lead to the collapse of the public pension fund if no consistent measures are taken to develop the multi-pillar pension system,” Lupusor said. The reform of the public pension system was initiated in 1999 and aimed to facilitate the switch to the social assistance principle, to adjust the social contributions to the size of the pension and to gradually increase the retirement age limit. “For political reasons, the reform was stopped in 2002 when the retirement age limit for women was 57 and for men 63. The current public pension system became a hybrid that incorporates outdated elements from the Soviet-type system,” the expert said. The international experience shows that in order to ensure a pension close to the value of the incomes earned during the active period of life, the public pension fund must be supported by implementing and developing additional pillars – private pensions. “The private pension system cannot be developed if there are no stimulatory fiscal instruments (fiscal deductibility) both for the administrators of the funds and for potential beneficiaries,” Adrian Lupusor said. Expert-Grup is an independent analytical center that carries out research and provides consultancy and training in the area of economic and social policy.