Legislation Publications Pension models About project Statistics
Legislation Publications Pension models About project Statistics

1. Introduction

2. Actuary expertise
2.1. Contents of the actuary expertise
2.2. Actuary control cycle
2.3. Actuary expertise tools

3. Basics of the pension legislation of the Republic of Moldova
3.1. General principles
3.2. Social insurance contributions and taxable basis
3.3. Pension types and conditions of their assignment
3.3.1. Old age pensions
3.3.2. Disability pensions
3.3.3. Survivors pensions
3.3.4. Pensions to some categories of citizens
3.3.5. Social pensions/benefits
3.3.6. Pensions paid from the state budget
3.4. Minimal pension and guaranteed minimum
3.5. Pension formulas
3.6. Pension indexation

4. Demographic situation in the Republic of Moldova
4.1. Dynamics of population number and sex/age structure
4.2. Birth rate
4.3. Mortality and life expectancy
4.4. Marriage and divorce rates
4.5. Population natality and reproduction
4.6. Demographic forecast

5. Current macroeconomic situation
5.1. Tendencies of population economic activity
5.2. Development of basic forecast

6. Background information on pension insurance
6.1. Number of pensioners
6.1.1. Analysis of the number of pensioners
6.1.2. Distribution of the number of pensioners by pension types
6.1.3. Sex/age number of pensioners
6.2. Pensioner’ standard of living
6.2.1. Average size of pensions
6.2.2. Compensation of lost wage
6.2.3. Gender differences in pension sizes

7. Modeling outputs

8. Outputs and perspectives of the development of pension system of the Republic of Moldova

9. Annex: Analysis of the risks of the Non-Financial Defined Contribution (NDC) and Financial Defined Contribution (FDC) pension systems
9.1. Principles of the design of NDC pension system
9.2. Principles of the design of FDC pension system
9.3. Experience of applying FDC schemes
9.4. Comparison of NDC and Funded schemes

Pension system of the Republic of Moldova: actuary expertise


The launch of the pension reform in the Republic of Moldova was marked by the adoption of the Law no.156-XIV from October 14, 1998 on the state social insurance pensions, which came into force on January 1, 1999.

This Law envisages the preservation in the Republic of Moldova of one-level distributive pension system. For the record of pension rights, gained beginning with January 1, 1999, a new pension formula, directly relating the paid individual contributions to the size of future pensions, has been introduced. Additionally, the transition formula has been introduced; it combines the pension rights, gained before the reform, and rights, gained in the new system. Simultaneously, the process of gradual renunciation from many pension privileges, as well as phased increase of the retirement age and length of insured service, required for old-age pension granting, has started. In 2003 the legislation envisaged the rates of annual pension indexation by an average value between the consumer cost indices and average wage in the country for the previous year.

Nevertheless the reform, launched in 1999, could not be described as drastic or logical. The point is that the political realities of the recent years conditioned a range of deviations from the original strategy of pension reform that was reflected in several amendments, introduced by the Parliament in the fundamental pension law from 1998 (temporary freezing of the retirement age, reestablishment of a range of aborted pension privileges etc.). As result at present the state pension system of the Republic of Moldova represents a quite complicated hybrid, including many elements of the old pension system, inherited from soviet times, and elements of the new insurance system. Thus, the current pension system of the Republic of Moldova is a typical product of the transition economy, requiring further improvement and regular adjustment to changing economic realities.

The importance of pension reform is also conditioned by the fact that the pension system is integrated deeply in the national economy and its progress (failures) influences the level of financial insurance of pensioners, as well as determines mainly the parameters of current and perspective socio-economic situation in the country and has a considerable impact on macroeconomic situation on the whole.

Under these quite complicated conditions the Ministry of Health and Social Protection of the Republic of Moldova considers necessary the realization of periodic and reliable socio-economic calculations and forecasts, which shall ensure the required quality of practical activities in the framework of pension reform, form the basis of further improvement of pension legislation and drafting of new regulatory and legal acts. The forecast calculations are also necessary for the selection of optimal decisions, ensuring the vitality and stability of pension system, operative response to demographic and socio-economic changes in the country, efficient use of financial resources and ensuring the fulfillment of obligations towards pensioners.

At the first stages of pension reform for the modeling of pension system scenarios, various “universal” models with the involvement of foreign experts were used. However, it is to be mentioned that none of these models could meet the requirements of the specialists in pension insurance of the Republic of Moldova. The standard models were adapted hardly to the specifics of pension system of the Republic of Moldova. Besides, the considerable limitations in relation to the existing statistic information, available for users, came often into conflict with the requirements of the standard models related to the use of incoming data.

This condition determined the Ministry of Health and Social Protection of the Republic of Moldova, supported by the World Bank, to proceed to the implementation of the project, aimed at developing a system of imitational models of the state pension insurance system of the Republic of Moldova. It is to be mentioned that in 2004 the bidding for the development of the appropriate set of applications was won by the Independent Actuarial Information-Analytical Center, having experience in the design of such programs for the Russian pension system. At present the set of applications includes three main models: Analytical model of pension system of the Republic of Moldova, Pension calculator and Middle-term model of pension system of the Republic of Moldova, which are regularly developed and adjusted.

It is obviously that in the process of program set operation new requirements shall appear due to the modification of pension laws and external conditions, predetermining new tasks. New requirements shall be also made by the developing pension system of the Republic of Moldova. All this shall lead to the development and adjustment of the existing program set to the appearing realities. This work could be performed in two directions: adjustment of the basic analytical model and creation of additional applications.

The most perspective in this relation is the development of the applications, allowing to evaluate the efficiency of the implementation in the Republic of Moldova of conditional-cumulative pension system, development of non-governmental (additional) pension insurance system, including creation of corporative pension system, as well as other possible directions of pension system reform.

It is to be mentioned that the development and improvement of the above-mentioned set of applications does not represent an end in itself. This is only a tool for the realization of the actuary expertise of pension system, monitoring of its main parameters. It should be mentioned that in the Republic of Moldova the developed tools are used actively for their direct destination and certain experience was accumulated in the analysis of the change of socio-economic and financial indices of the national pension system in a long-term perspective by applying the actuary models.

The Ministry of Health and Social Protection in cooperation with the Independent Actuarial Information-Analytical Center prepared for the publication two monographs: “Pension system of the Republic of Moldova” actuary expertise” and “Gender aspects of pension system of the Republic of Moldova”; in the process of their drafting they applied the outputs of the modeling, carried out by means of the models from the set of applications.

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