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June 16, 2021

FinMin: With mandatory pensions dominant in the system, we won’t be able to pay to pay pensions in 20 years

Certainly in 20 years, pensions will not be able to be paid in Romania in case pensions administered by the state through Pillar 1, the mandatory pensions, remain dominant in the system, said, on Friday, Minister of Public Finances, Florin Citu.

“The pension system must be reformed, it’s clear, but we must also take into account two things: there’s a large generation that is retiring, and the resources to come aren’t as large, because the youths that come decide not to remain in Romania, and then it’s hard to support this system, but it’s not a problem just Romania has, it’s a problem we’ve seen in other countries, as well but there they found solutions. We will also find solutions. The solution I see is a system with higher contributions towards a privately administered system, with a greater distribution of resources towards that side, because there is a higher yield and you can have an insured pension. If we remain with a dominant system of pensions on Pillar 1 we will certainly not be able to pay pensions in 20 years, that’s my opinion,” said Florin Citu, according to Agerpres.

Citu emphasized that, if we want to have a sustainable system, it would be preferred that the privately administered part be dominant, not the state part.

The Minister of Public Finance also stated that the privately administered pension system suffered in the past years some negative shocks and the Government will try to correct on Friday’s sitting a great deal of inequities, and the rest during the next year.

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