He added that the state pension draft law, which the Senate will discuss next week and which should come into force on January 1, 2011, introduces a new way of computing the pension point.
‘Under the new computation system, the value of the pension point shall be adjusted 100 percent for inflation of the previous year plus 50 percent of the real increase in the average gross wages of the same year.
For instance, taking the first year of the law application as an example, we have inflation projected by the National Bank of Romania (BNR) at 3.5-4 percent plus half of the 1.6 percent rise in real terms in the gross industrial wages, that is 0.8 percent. That means the pension point indexation in 2011, in keeping with the official projections, will be 4.8 percent at most,’ Seitan explained.
He pointed out that the new computation way, taking into account the inflation and gross wages, will be applied for 10 years, after which the weight of the gross wages in the pension computation point will decrease by 5 percent each year. From a starting 50 percent, it will get down to 45 percent, then 40 percent, so that in 2030 the indexation will be made exclusively against inflation.
‘Keeping the pension point at 45 percent of the gross economic wages was first regulated under a 2001 law, which was postponed until 2011, applied two months in 2008, before an election campaign, after which no government was able to sustain such level,’ said Seitan.
‘That moment contributed to the current huge deficit in the state pension system, which has to be covered from the Government budget: 1.5 billion euros in 2009 and 1.7 billion euros in 2010.
Analyses and projections for 2011-2015-2020 have indicated that if we keep the same system in place, without any changes, this deficit will shoot up to almost 6 percent of the Gross Domestic Product (GDP). That would be inadmissible and financially unsustainable,’ Seitan concluded.
The pension computation point is currently standing at 39.9 percent of the gross industrial wage. An increase to 45 percent would have entailed 2010 budgetary efforts of 1 billion euro in addition to 1.7 bullion euros already earmarked to support the state pension system.