Pensions bill adopted by Senate

The Senate adopted on Monday, with 81 votes in favour, 12 against, and 8 abstentions, the Government’s bill on the public pensions system.

The Senate also adopted some amendments tabled by the PNL and UDMR, however the amendments did not concern the substance of the bill.

The bill will next enter the House, the Chamber of Parliament that will have the last say on this matter.

The bill entails the gradual hiking of the pension point until 2021, thusly: 2019 – RON 1,265; 2020 – RON 1,775; 2021 – RON 1,875. From 2022, the value of the reference pension point will be indexed annually with the inflation rate and 50 percent of the real hike of the gross average salary. The pension point will reach 45 percent of the gross average salary, however without taking into account the tax burden, in line with the fiscal legislation in force on the date the governance programme was adopted. The bill stipulates that that no pension currently in payment will drop in value. If, following the recalculation, the result is a sum lower than the one currently being paid, then the sum currently paid will be maintained.

The bill maintains the optional insurance contract, but with amendments. Thus, while the law currently in force allows retroactively paying contributions for five consecutive years, in the future one will be able to choose different non-contribution periods that would total 5 years. The sums can be paid in instalments, but no later than one year after the signing of the contract. In case the sum is not paid in full, the partially-paid sum will be taken into account. At present, the optional insurance is calculated based on the minimum salary, but in practice it has been proven that this does not even ensure the minimum guaranteed pension, so it was decided to use the average salary as indicator. This type of contract is concluded only in the case of persons who have contributed a minimum of 15 years. The provisions concerning the insurance contract for future periods are maintained, with the new basis of calculus.

The novelties brought about by this bill include the introduction of Master of Arts and Doctoral studies as non-contributive periods assimilated to the period of contribution, coming on top of the already legislated Bachelor of Arts studies, involuntary draft, invalidity pension, medical leave, parental leave, indemnified unemployment, deportation, period spent as prisoner of war or political prisoner. The condition for the non-contributive period to be assimilated to the period of contribution is for the minimum period of contribution to be 15 years. 0.25 pension points are offered for each year of the assimilated period.

At the same time, the bill defines a pensioner as the person who benefits from social insurance pension and has contributed for a minimum of 15 years, as well as the blind persons who have fulfilled one third of the full contributory period. Blind persons have been nominated as pensioners within this category too, their situation having been regulated in the entire succession of legislative acts since 1967, in specific conditions determined by their physical situation, this being the reason for the fact that the contribution period required for their retirement is lower than the minimum contribution period stipulated by law for public pensions system insurants.

The special and uncommon labour conditions and the former labour groups are maintained and, likewise, the legal basis is created to recognise other jobs that feature special labour conditions.

Likewise, the threshold for the reduction of the retirement age has been lowered from 6 years to one year in the case of uncommon labour conditions, and from 2 years to one year in the case of special labour conditions. For instance: for one year of work in uncommon labour conditions the retirement age is lowered by 3 months, while for one year of work in special labour conditions the retirement age is lowered by 6 months.

The bill stipulates the same 4 categories of pensions: retirement-age pension, early-retirement pension, invalidity pension and survivor’s pension. They are the same four categories as in the old law, but some have undergone structural changes.

In the case of retirement-age pension, both the minimum period of contribution and the standard retirement age conditions must be met.

As an exception, the current early retirement pension (non-penalised) becomes retirement-age pension. Namely, persons who have exceed the full contribution period – including assimilated periods – by 8 years, can retire 5 years before reaching retirement age. At the same time, in this case the pension can be cumulated with a salary and the assimilated non-contributive periods are capitalised on.

Another novelty is that women who contributed for a minimum period of 15 years and gave birth to 3 children that they raised until each of them was 16 years of age will benefit from a 6-year reduction of the retirement age. One extra year is added to the reduction period for each child born and raised in excess of the three already mentioned.

All other legal provisions currently in force regarding the retirement-age pension, such as the groups, the special and uncommon conditions, the handicaps etc., remain in force.

Early retirement (penalised) is the current partial early retirement and the legal provisions currently in force will be maintained.

When it comes to the invalidity pension, the degrees of invalidity are redefined in order to offer the possibility of carrying out some professional activities in parallel. Thus, the first degree is characterised by severe functional deficiency and diminished capacity for work; the second degree is characterised by pronounced functional deficiency and diminished capacity for work; the third degree is characterised by average functional deficiency and diminished capacity for work.

The survivor’s pension is maintained, and a new benefit is introduced in addition to the current provisions, namely the aid for the surviving spouse, the latter collecting 25 percent of the deceased spouse’s pension. This benefit can be cumulated with the surviving spouse’s own pension.

The minimum pension is calculated in relation to the gross minimum salary that year. Persons that have contributed for at least 15 years will receive 45 percent of the gross minimum salary, with 1 percentage point added for each year of contribution coming on top of that. Persons that have contributed for 10-15 years and who are retired when the law comes into force will receive 40 percent of the gross minimum salary, with 1 percentage point added for each year of contribution coming on top of that. If the result is a higher sum, then the person will receive it. The formula was introduced to remedy an inequity stipulated by the current legislation, which made no seniority-based difference between the beneficiaries of the minimum pension. Namely, for instance, one pensioner who worked 12 years ended up having the same pension as one who worked 35 years but earned the minimum salary during that time, the Labour Ministry points out.

Another novelty is the introduction of the possibility to opt for minimum social indemnity. Persons who are already retired and whose contribution period is lower than 15 years will be able to choose between pension and the minimum social indemnity. The operation will take place by post, through a pre-stamped form received from the National Public Pensions House, to avoid long lines at counters.

Persons who are already retired and whose contribution period is lower than 15 years benefit from recalculation based on the new formula, and if the resulting sum falls below the minimum social indemnity they can opt for the latter. Pensioners who do not opt for it will receive the sum that results from the contribution-based calculus. Pensioners who benefit from retirement-age pensions and who meet the minimum period of contribution of 10-15 years, in line with the current legislation, are exempted. This exemption is valid only for persons who are already retired on the date the law comes into force.

The bill stipulates that a period of contribution of at least 15 years is required to be able to retire. Persons with lower contribution periods on the date the law comes into force will receive a social indemnity and will form the object of another law.

The bill stipulates that all salary rights for which contributions were paid are to be used: benefits, global agreement, the 13th salary, overtime, premiums, awards and other bonuses. Ten percent will be offered ex officio, a percentage that could be hiked provided the pensioner produces evidence resulting in a higher percentage. If the re-calculation based on the evidence adduced results in a lower pension, then the pension calculated with the initial 10 percent hike is to be paid. This modification was made because contributions have been paid for this type of incomes but they are not currently taken into account when the pension to be paid is established, according to the Labour Ministry.

The pension will represent the total number of pension points multiplied by the value of the reference pension point. The total number of pension points represents the sum of annual points. The annual points are the sum of the monthly points divided by 12. The monthly points consist of the gross income divided by the gross average income. The value of the reference pension point will stand at RON 75 in 2021 and was obtained by dividing the value of the pension point (RON 1,875 in 2021) to 25, the latter representing the average contribution period in the pensions system obtained as a result of the enforcement of the four previous pension laws.







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