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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

6. Background information on pension insurance

6.1. Number of pensioners

6.1.1. Analysis of the number of pensioners

From 1999 to 2005 in the Republic of Moldova it was noticed a certain decrease of the total number of pensioners. From the data represented on the picture 6.1 it is seen that the total number of pensioners went down in the given period by 63,9 thousand persons or 0,5%, constituting at the end of 2005 - 618,3 thousand persons. Until 2004 the reduction of the number of pensioners had higher rates than the decrease of the number of total population of the Republic of Moldova. As result by 2003 the share of pensioners in the total population number went down to 17,4% (from 18,7% in 1999). However, in 2004-2005 the number of pensioners grew up again and stabilized at the level of 18,2-18,3%. It seems that besides demographic reasons the fluctuations in the relative number of pensioners could be explained by the increase of the retirement age in the Republic of Moldova in the period from 1999 to 2002.

Picture 6.1. Number of pensioners.

The analysis of the number of pensioners by sex is represented on the picture 6.2. It could be seen that in the studied period the number of pensioners, both men and women, went down slowly: for women from 413 thousand in 1999 to 381 thousand in 2005 and for men from 250 to 238 thousand persons. The correlation between the number of pensioners, men and women, increased by 2% (in 2001 – 60,5% and in 2005 – 62,5%), demonstrates that the number of women went down more sharply. It is to be mentioned that the annual change of the number of pensioners is determined by the correlation between the number of deceased pensioners and new pensioners (newly retired). In this case (related to pensioners) the difference between the number of emigrants and immigrants could be ignored..

Picture 6.2. Number of pensioners by sex.

The Picture 6.3 presents the dynamics of the change of the number of new pensioners. In the studied period the number of new pensioners grew up by more than twice from 15,0 to 34,5 thousand persons. Such sharp growth is conditioned by the change of the retirement age and also by so called cohort effect.

The annual increase of the retirement age by half a year (as it happened in the Republic of Moldova) diminishes by about twice the number of new old age pensioners (the most numerous pension category) in the year of such increase.

If there was no increase of the retirement age, all citizens reaching the previous pension age were retired. The new retirement age is by six months higher than the previous, therefore the right to pension shall have only those citizens the age of which is higher or equal to the previous pension age plus half a year. Considering that birthdays are distributed uniformly, such citizens shall constitute half of those who could reach the previous retirement age this year.

The cohort effect is manifested in a strong influence on the number of new pensioners of changes in the number of certain age/sex cohorts in different years. In this relation the changes in the number of population of pension age determine the changes in the number of “new” pensioners.

Picture 6.3. Number of new pensioners by sex.

On the demographic tree (Picture 6.4) the black color represents those sex/age population groups, which in the period 1999-2005 reached the age: men – 62 years and women – 57 years. These are the cohorts, which constituted the number of new pensioners in this period.

The low number of women in the considered groups is explained by the fact that the women born in the war or early after-war periods reach the pension age in the given period. In 2003 the most small cohort reached the age of 57. In the next years it is noticed a gradual increase of the number of women of this age that leads obviously to the increase of the number of new pensioners-women.

The men’s situation is different and this is related to the differences in the legislation of the established retirement age for men and women (62 years and 57 years). Therefore, the war generations of men reach the retirement age by 5 years later than women. On the picture 6.4 it could be seen quite clear that this process is developing in relation to men and given this in the nearest years the reduction of the number of new pensioners-men could be expected.

Summarizing the above-mentioned it is to be mentioned that due to the growth of the retirement age and pensioning of “war” (small) cohorts, the number of “new” pensioners went down at the beginning. After the “freezing” of the increase of the retirement age in 2002 and its achievement by numerous cohorts (especially women), the number of “new” pensioners has begun to increase.

Picture 6.4. Demographic tree of the population number of the Republic of Moldova in 2006.

Despite the fact that in 2003-2005 the number of new pensioners grew up, it was insufficient for compensation of the reduction of total number of pensioners due to their mortality. This led to the fact that the reduction of the total number of pensioners was accompanied by the growth of newly assigned pensions. The picture 6.5 shows as an example the indicators characterizing the dynamics of the development of this process for women-pensioners. It could be clear seen on the picture that until 2005 the number of deceased women-pensioners exceeded the number of new assigned pensions to women. Then, in relation to the achievement of the retirement age of quite numerous cohorts, this correlation changed leading to the increase of the total number of women-pensioners, which shall be observed until 2025. The period 2025-2030 shall be also characterized by a certain decrease of the total number of women-pensioners that is probably explained by the fact that the pension age shall be reached by a small cohort of children, born by “war children”.

Picture 6.5. Discrepancy in the number of female cohorts of new and deceased pensioners

 


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