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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

5.2. Development of basic forecast

For the development of the long-term macroeconomic forecast, the forecast of the Ministry of Finance of the Republic of Moldova for 2007-2009, developed in 2006, was taken as a basis. For the period 2009-2050 the Independent Actuary Information-Analytical Center made the evaluation of the main macroeconomic indicators, resulting from the trends of these indicators specific for countries with a stable economy. These scenario assumptions laid on the basis of the basic forecast. The table 5.4 presents the results of the modeling.

Table 5.4
Macroeconomic indicators for 2005 – 2050.

Indicators

2005

2006

2007

2008

2009

2010

2020

2030

2040

2050

GDP, mln. lei

36800

43000

49300

56000

63300

71328

198010

399890

613838

912131

Real rates of GDP growth,%

7.1

6.5

6.0

6.0

6.0

5.8

4.3

2.8

2.0

2.0

Inflation, %

11.9

9.9

9.0

7.6

7.0

6.5

4.7

2.9

2.0

2.0

Average salary, lei

1 319

1 650

2 015

2 420

2 860

3 322

11 126

23 062

36 854

54 764

Rates of real salary growth, %

13.1

14.0

12.9

12.1

10.8

9.1

6.5

3.1

2.3

2.0

LRF, mln. lei

10500

12400

14800

17400

20500

23594

79204

159956

245535

364852

Number of economically active population, th. persons

1 422

1 428

1 441

1 454

1 467

1 478

1 491

1 418

1 301

1 106

Number of employed, th.persons

1 319

1 324

1 336

1 349

1 361

1 372

1 393

1 327

1 221

1 040

As it was mentioned the official macroeconomic forecast envisages quite high rates of GDP growth for the next four years, that is naturally, since the Moldovan economy overpasses the period of stagnation and enters the period of economic growth. The basic forecast assumes that these rates could be maintained up to 2010 and then gradually reducing by 2030 year by 2,8% shall stabilize by 2,0% annually. According to the forecast, the inflation should have the same behavior. By 2010 the rates of its growth shall exceed the rates of GDP growth and shall constitute from 9,0% (in 2007) to 6,5% (in 2010). Then they shall get closer to the rates of GDP growth and shall constitute 4,7% and 2,9% in 2020 and, correspondingly, in 2030. By 2040 as the rates of GDP growth they shall reduce by 2,0%. The dynamics of their development is presented on the Picture 5.10.

Picture 5.10. Forecast values of the rates of GDP and inflation growth.

A special attention in the forecast development was paid to the rates of salary growth. Now the average salary in the Republic of Moldova remains behind considerably from the average salary in developed countries. So, in 2005 it constituted 1319 lei or about 105USD according to the data of the Ministry of Finance. It should be remembered that the salary is the basic source of income part of the pension system budget and the efficiency of system functioning depends on its amount and growth rate. In this relation, it is obviously that the forecast expects in the first years quite high rates of real salary growth. The Ministry of Finance established the value of this indicator in the limits from 14% to 11% for the period 2006-2009. This shall allow increasing the size of average monthly salary for this period by more than 70%. In future, it could be expected the gradual decrease of the rates of this indicator growth and its further stabilization. The scenario forecast assumes that the stabilization shall take place after 2040 at the level of 2%. Generally, for the forecasted period (2005-2050), according to the made assumptions, the real salary shall grow up by about nine times. The picture 5.11 represents a graph reflecting the forecasted rates of real salary growth.

Picture 5.11. Forecast values of the rates of real wage growth.

Scenarios of the forecast of population economic activity

In order to evaluate the number of economically active population it is necessary to know the value of two basic indicators: number of population in corresponding sex/age groups and level of its participation in the economy. The number of population is determined by the demographic forecast. The forecast of the level of economic activity depends on the dynamics of this process and developed scenario projections. Taking into account that the sex/age levels of population activity are endogen parameters (the deficit of labor force increases the work costs that leads to the increase of the level of participation, while the unemployment growth, on the contrary, is accompanied by the reduction of participation), this makes the long-term forecast of economic activity a quite difficult task.

It could be supposed that in a stable economy the level of population economic activity changes insignificantly. Therefore, in the calculations the data for last reported year or average values for reported period could be used. For the Republic of Moldova the more acceptable is the first variant, since the instability of macroeconomic situation also generated the instability of labor market.

The developed basic variant of the forecast of the economically active population of the Republic of Moldova is presented on the picture 5.12. It is based on the assumption that its dynamics shall be determined exclusively by demographic parameters. In this relation it is assumed that the level of economic activity by socio-demographic groups remains unchanged in the forecast process. The reduction of the level of youth participation in the economy shall cease and the level of participation of old age groups shall not increase.

The selected demographic forecast assumes the reduction of the number of population of the Republic of Moldova during the whole forecast period. However, the number of economically active population shall increase slightly: by 2015 by about 5,8%. Then it shall decrease and shall reduce by the end of the forecast period by 317 thousand persons or 22,3%. It is to be mentioned that the forthcoming growth of the number of economically active population is conditioned mainly by the influence of the cohort effect, which shall cease in 2014. The change of the number of economically active men and women reiterates the common tendencies of the change of the number of economically active population. Generally, from 2005 to 2050 the number of men of the economically active age shall decrease by 121 thousand persons or 17,6%, while the women – by 195 thousand persons or 26,6%. As result at the end of the forecast period the number of economically active men shall exceed slightly the number of economically active women, while at the beginning of the forecast period there was a reverse situation.

Picture 5.12. Forecast of the dynamics of economically active population.


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