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

2.2. Actuary control cycle

The basis of the actuary expertise is the Actuary control cycle1, proposed in 1985, representing a particular case of the general control cycle, used in all spheres. The main stages of the actuary control cycle, adjusted to the actuary expertise of the Russian pension system, include the preliminary stage, identification of the issue, accomplishment of the task and monitoring.

Preliminary stage
The preliminary stage includes the analysis of the general economic, commercial and socio-demographic environment in which the pension system of the Republic of Moldova is operating, i.e. the analysis of “the context” of the actuary expertise.

Identification of the issue
The main task of this stage is the identification and evaluation of the risks of all parties, involved in the insurance process and determination of factors influencing the risks, possibilities of risks reduction (redistribution). Based on the results of risks’ analysis, the tasks of the expertise are set and the results’ evaluation criteria are defined.

The analysis of risks includes:

  1. identification of the risks of pension insurance subjects2. For any insurance type one of the insurance subjects are the citizens (insured persons). In the analysis of the state pension insurance the second subject is the state (including the National Social Insurance House). In the expertise of the pension system the risks of citizens and state are the basic risks. The risks of other parts are examined from the point of view of their impact on the interests of state and citizens, and of limitation of possibilities for taking any decisions;
  2. detection of factors, influencing the risks;
  3. preliminary evaluation of risks, including quantitative evaluation of those risks for which it is not difficult to carry out;
  4. review of the possibilities of reducing (smoothing the consequences) the risks3, and also redistribution of risks between subjects. It is to be mentioned that during the expertise the risks and ways of their influence are considered in a long-term perspective.

Accomplishment of the task
The main task of the actuary expertise of the national pension system is the evaluation of expected results of the system operation from the point of view of all interested parties. At this stage the actuary studies the possibilities of applying the existing models for solving of issues and if necessary adjusts them and (or) develops new models. Then the actuary analyzes the available initial data (demographic, macroeconomic etc.) and sets the values of the model parameters, often using informal methods, because it is impossible to determine exact values of many parameters, particularly related to future forecast.

The last stage of the actuary expertise is the monitoring of indicators, related to pension system. At this stage the issue of generalizing the actual experience of system operation and its comparison with the expected is solved. The monitoring results could lead to the necessity of specifying the task and (or) its solutions. As result the expertise participants return to the specifying of above-mentioned stages and the control cycle is over.

It is to be mentioned that an important element of the monitoring is the identification of the reasons of deviation of real experience from the expected.

The actuary control cycle is shown schematically on the picture 2.1. Double arrows point to reverse relations.

Picture 2.1. Actuary control cycle.

At the preliminary stage the general economic, commercial and social environment, in the framework of which the pension reform of the Republic of Moldova is implemented (i.e. “the context” of the pension reform) is examined. For the next expertise it is important to examine the status of the given environment, both current and at the date of decisions’ taking. Certainly, in the framework of this report it is possible to consider only some of the basic moments.

1. Goford J. The Control Cycle: Financial Control of a Life Assurance Company/Presented to the Institute of Actuaries Students’ Society on 12th February 1985.

2. Usually in finding solutions to more local tasks, for example organization-expertise-modification of the professional scheme of the enterprise, the matter concerns the risks of the client (for example, financing the employer’ scheme). The risks of other subjects are considered from the aspect of their influence on the client. Particularly, the risks of the scheme members – enterprise workers, are only considered as potential sources of risks of the client (in this case – of the entrepreneur).

3. When it is a question of the pension system development, the main task is the identification of the solution, allowing reducing (balancing) the risks of parties. The main task of the expertise is the evaluation of risks and if necessary the determination of the issue of system adjustment. Nevertheless, the proposal of actions for the risk reduction due to the regulation of the legislation represents an important part of the expertise.

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