Labor Minister Plumb announces 5 pct rise in pensions, 16 pct increase in disability benefits as of 2015

Pensions will rise by 5 percent as of January 2015 and disability benefits will also grow by 16 percent, Labor Minister Rovana Plumb told a conference on private pensions this Monday.

The pension growth will exceed the percentage increase set forth by the law, which corresponds to inflation pegging plus 50 percent of the real growth in the gross nationwide average salary; the growth in disability benefits is connected to the rise in the consumer price index over the past six years, a period during which these payments have no longer been supplemented, explained Rovana Plumb.

„We enforce the law. According to the calculation formula provided by the law, taking into account the inflation rate (…) plus 50 percent of the real growth in the average gross salary results in a 4.5 percent increase. Given that we have economic growth, that jobs have been created, that we have 5.3 million contributors to the national pension scheme (…), that budget collections allow us a higher rate, we announced and will apply a 5 percent increase. I discussed with the Finance Minister and the Budget Minister to make sure that as of January 2015 we have a 5 percent increase in pensions,” said the head of the Labor Ministry.

Rovana Plumb explained that the minimum wage per economy will grow to 975 RON from the current 900 RON. „There is definitely a commitment of the Government for us to reach 1,200 RON in 2016. Following talks with international financial institutions we determined a half-year rise by 75 RON in 2015,” said Plumb.

Speaking of the private pensions system, Rovana Plumb mentioned that a review thereof is underway with WB technical assistance, and that the Government’s message is that a multi-pillar system is pursued and the nationalization of private mandatory pensions Pillar II is out of question. „Talks are currently underway, transfers to Pillar II stand at 4.5 percent [of the gross salary]. Following talks with the Financial Supervisory Authority we will decide whether to rise these contributions or not,” said the Labor Minister.

Contributions to the mandatory private pension funds are projected to increase by 0.5 percentage points per year. Rovana Plumb also assured that the public pension system faces no default risk. She added that there were 5.3 million contributors registered in Romania at the end of September and 5.794 million active work contracts that contribute to the budget; of these, 5.2 million are indefinite period full-time contracts.

The Labor Minister also showed that, thanks to the measures adopted by the Government, 200,000 new jobs were created between January 2013 — September 2014 and the employment rate has increased too. With an unemployment rate of 6.71 percent compared to 12 percent in the euro area and 11 percent the EU average, Romania is in a very good position, underscored Rovana Plumb, mentioning that Romania’s top priority is to increase the youth employment rate, which is still far below the EU average. (Agenţia Naţională de Presă AGERPRES)

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