PROPOSAL REGARDING THE REFORMATION OF THE ROMANIAN PUBLIC PENSION SYSTEM

Abstract

The social insurance system from Romania, reformed continuously since the 90`s, is undergoing a period of serious crisis, with huge and growing deficits, while being far from the principle of social reasonability. Similar situations are found also internationally. The paper aims to answer the following question: how could we implement the principle "equality between present and future generations"? Taking into account the data provided by the National Institute of Statistics from Romania, Eurostat, the World Bank and EU regarding: developments in the birth rate, the number of contributors, life expectancy, the forecasts made in Romania, but also internationally, on sustainability and reasonability of public pension systems, are pessimistic. This paper proposes a solution as simple as it is effective. Why could it not exist in Romania a decent unique minimum pension linked to a decent minimum wage through the mandatory pension contribution rates? Why the welfare of pensioners in 2065 must depend on the existing number of employees in 2065, particularly given the pessimistic demographic forecasts that indicate a population decrease of 20% since 2060? The current PAYG pension system it will not be sustainable in future. Therefore it has to be changed.

Keywords

• pensions
• reformation
• public pension system
• social insurance