Gender aspects of the Republic of Moldova’s pension system
11.1. Advantages and disadvantages of the retirement age increase and its “equalization” for men and women
At present the issue of further increase of the retirement age becomes again very actual for the country due to both economic and demographic reasons. However, the issue is still open in relation to the possibility of further increase of the retirement age and also to possible trajectory of such increase (how much this age could be increased and for whom: for both sexes, only for men or only for women).
In any case now there are many arguments (demographic, economic, social and finally political) in favor of this increase and against it. There is no unity in opinions in how to increase it (if the decision on the increase of the retirement age is taken). Should this increase “equalize” the retirement ages of men and women or the gender differentiation in the retirement age shall be kept in future. Below we shall describe some of them.
Arguments in favor of the increase of the retirement age and its equalization based on sex:
- At first sight the increase of the retirement age is the most simple way of strengthening the financial stability of pension system due to the decrease of the expenses part of pension system (reduction of the duration of the period in which the pension payments are made), and increase of its revenues part (increase of the duration of the period in which the pension contributions are paid). In other words, the increase of the retirement age leads to the reduction of the pension burden due to the increase of the number of able-bodied population and decrease of the number of old age pensioners. From the financial point of view this is equal to the increase of the level of pension insurance under fixed pension contributions or, on the contrary, reduction of the size of pension contributions under fixed level of pension insurance.
- The increase of the retirement age could help the workers, wishing to continue the professional activity after the achievement of the established pension age, not being afraid of being dismissed due to the achievement of the pension age. Or in other words the level of age discrimination could be reduced on the labor market.
- In the conditions of gradual population ageing in the Republic of Moldova (as well as possible increase of the life expectancy) the retirement age should be increased sooner or later.
- In favor of equalizing the retirement ages is, first of all, the transition to the new principles of pension insurance, according to which the size of person’s pension in a greater decree than earlier shall take into account its working contribution to economy and more precisely the duration of payment of pension contributions and their volume. As result of these changes all forms of direct and indirect discrimination based on sex existing in the employment sphere begin to have a negative influence on the size of women’s pensions. More than that under new conditions lower retirement age established for women becomes an element of their discrimination and a factor of the increase of gender discrepancy in the size of pensions in future.
- One more argument in favor of equalizing the retirement age for men and women is the gender discrepancy in the life expectancy and residual life duration. The analysis of values of these indicators for the Republic of Moldova shows that the further increase of the retirement age of Moldovan men is nowhere, since the duration of their residual life (life on pension) is very small. It seems that in case of taking the fundamental decision on increasing the upper limit of the capacity for work in the country, it is appropriate to examine only the increase of the retirement age of women.
Arguments against the increase of the retirement age and in favor of keeping its gender differentiation:
- The increase of the retirement age only legislatively strengthens the right/responsibility to continue by the person of its paid professional employment, while the possibility of realizing this right/responsibility remains for the present quite unreal due to a very difficult situation on the national labor market, existing at present (where there is a lack of working places). The increase of the retirement age in such conditions could have consequences far from expected. Instead of the growth of the number of payers and, correspondingly, of the amount of pension contributions, it could increase the number of unemployed, including those registered and receiving corresponding benefits (that shall increase the burden on employment system) or the number of self-employed (or number of informally employed), that shall not also contribute to the growth of the number of payers. Under such scenarios it would be difficult to expect the increase of the amount of pension contributions. The number of pension beneficiaries shall decrease in any case.
- Further increase of the retirement age raises the issue of social correctness of this decision. The point is that at present the residual life duration (especially for men) is quite small. The increase of the retirement age shall worsen more the very low correlation between the duration of the able-bodied age and duration of life on pension, established in the Republic of Moldova.
- As shows the analysis of the situation on labor market of the Republic of Moldova, in the country there are other ways of the increase of the number of payers of pension contributions (and correspondingly, the increase of the amount of pension contributions), the realization of which is not related to the increase of the retirement age. Obviously, it is a question of reducing the employment in the informal economy (the share of which is very considerable in the country) and attracting of informally employed to pay pension contributions.
- It is to be taken into consideration that at present the increase of the retirement age comes into conflict with the dynamics of the life expectancy of men and women. The demographic statistics shows that for the recent twenty years there were no positive movements in this issue. Both the life expectancy at birth and life expectancy at the achievement of the age of 65 did not actually change. More than that for the period 1986-2004 the life expectancy at the achievement of the age of 65 was even reduced a little (for men – by 1,29 years, for women – by 0,59 years ) ( see Picture 39).
- The argument against the equalization of the retirement age is the fact that in Moldova although the national legislation envisages the equality of men and women, in the actual life the considerable labor burden is falling on women (professional employment, house keeping and bringing up the children), since they have the traditional social role of “home keeper” that is explained by the existing stereotypes and traditions. In this situation, lower retirement age plays a “compensational” role. The issue of equalizing the retirement age could be discussed later, when in the country it shall be a more fair distribution of family responsibilities between husband and wife.