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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

3.1. Pension types and conditions of their assignment

The Law on state social insurance pensions of the Republic of Moldova envisages the payment from the social insurance fund of the following pensions: old age pensions, disability pensions and survivors’ pensions.

3.3.1. Old age pensions

The conditions of old-age pension assignment is the achievement of the retirement age, established by the legislation and corresponding length of insured service. With the adoption in 1998 of the Law on state social insurance pensions, since 1999 in Moldova the retirement age for both men and women has started to grow. Correspondingly, the length of service increased too. If earlier the men retired at the age of 60 and women at the age of 55, beginning with January 1, 1999 the retirement age has started to increase by 6 months per year and by 2008 it should constitute 65 years for men and 60 years for women. However, later on the Parliament passed the Law no. 1485-XV from November 22, 2002 on amending the article 41 of the Law no.156-XIV from October 14, 1998 on state social insurance pensions, which ceased the retirement age at the level of 2002 year, i.e. 62 years for men and 57 years for women. It is expected that the increase of the retirement age is ceased for a period of 5 years – until 2008. The seizing of the increase of the retirement age has led to a considerable increase of the number of newly assigned old age pensions. According to the data of the National Social Insurance House their number in 2003 (the first year after the seizing of the increase of the retirement age) compared to 2002 increased by 1,7 times. In 2004 and 2005 the increase of newly assigned pensions continued and their number increased by 21,8% and, correspondingly, 12,6%. For the period from 2003 to 2005 the number of new pensions increased by 2,3 times. The specialists of the Ministry of Health and Social Protection evaluate this situation as negative. From their point of view unfavorable demographic forecasts for the nearest years cast doubts on the possibility of financing the payments from the social insurance system and threaten the stability and reliability of the whole system: the low number of active workers (the main part of which are persons working abroad – illegal persons) shall not be able to correspond to the great number of pensioners, which shall increase in the next years1.

At the same time it is to be mentioned that beginning with 1999 (reform launch) according to the data of the National Social Insurance House the total number of pensioners went down annually and by 2005 was reduced by 12,5%. The number of old age pensioners for the same period went down by 15,7%. It seems that the correlation between the considerable increase of newly assigned pensions and reduction of the total number of pensioners is related not only to the seizing of the increase of the retirement age, but to the cohort effect, which means that quite numerous population cohorts achieved the retirement age.

The pension reform in Moldova envisaged the increase of the length of service by 35 years until 2008, both for men and women. This is a considerable increase if take into consideration that earlier the length of service, required for pension assignment, constituted 25 years for men and 20 years for women. However, the final draft of the Law on state social insurance pensions envisages from 2003 - 30 years of required length of service both for men and women. At the same time the Law has a provision stipulating that the insured person who by achieving the established pension age cannot confirm the full required length of service, but confirms the length of service of at least 20 years, has the right to a partial pension, calculated according to the length of service. Thus, now in order to get the right to old age pension it is enough to have the length of service of 20 years (certainly under condition of achieving the retirement age). It is to be mentioned that the Law stipulates certain standards, aimed at interesting the insured persons to achieve the length of service of 35 years and over. For each year of the length of service over 35 years the size of calculated pension is increasing by 2% of the insured income, while for each year of the length of service from 20 to 35 years – by 1,2%. The pension legislation of the Republic of Moldova also envisages certain incentives for later realization of the right to pension. In this case the size of pension is increasing by 2% of the insured income for each insured year, worked after the achievement of the established pension age.

The length of insured service in the state social insurance system is calculated by summing all insurance periods. The following non-insured periods are equal to insured periods: receiving benefits for temporary incapacity, maternity and birth, unemployment. The length of service also includes other non-insured periods as military service, taking care of a child up to 3. The length of service also includes the periods, in which before the Law on state social insurance pensions has come into force the following activities were carried out: work in collective farms; creative activity in artistic associations; activity as ministers of religion; taking care of the I gravity disabled person, disabled child, old people; full-time education in high institutions; military and military-related services.

However, the conditions of financing these periods are not regulated completely by the legislation. Even the order of including in the length of service of periods for taking care of disabled people and children, education and military service, in regard to which in the legislation there is a direct indication that they are compensated from the state budget, is not described in the standard acts yet.

The pension reform liquidated from January 1, 1999 the seniority pensions, assigned to the workers from health and education spheres. However, those pensions assigned before this date continue to be paid from the social insurance budget. Generally the number of these pensioners for the period 1999-2005 went down by 41,3%, their share in the total number of pensioners has reduced from 0,8% to 0,5%.

The pension reform also allowed reducing significantly the number of pensioners-beneficiaries of privileged pensions. If in 1999 their number amounted to 148,2 thousand persons and constituted 21,7% of the total number of pensioners (compared to old age pensioners- 27,6%), in 2005 their number went down by 2,4 times, constituting 62,3 thousand persons or 10,1% of the total number of pensioners (13,6% of the old age pensioners). The volume of the privileged payments was also reduced more than twice. Their share in the total volume of payments decreased from 22,4% in 1999 to 10,6% in 2005. Now the privileged pensions are only assigned to persons, working in injurious and hard working conditions (set in the List no.1), as well as to women who gave birth and grew up 5 and more children up to 8. Earlier the pension reform envisaged that the retirement age, required for assigning privileged pensions, would increase gradually until reaching the general threshold. However, later (from 2004) for persons working in injurious conditions the following pension age was established: 54 years for men and 49 years for women (54 years for mothers of many children).



1. Annual social report for 2003of the Ministry of Labor and Social Protection, page 44.

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