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

1. Introduction

2. Fundamentals of Moldova’s Pension Legislation
2.1. General Principles
2.2. Insurance Contributions and the Tax Base
2.3. Types of Pensions and Terms and Conditions of Their Assignment
2.3.1. Old-age Pensions
2.3.2. Invalidity Pensions
2.3.3. Survivor’s Pensions
2.3.4. Pensions to Specific Categories of Population
2.3.5. Social Pensions/Benefits
2.3.6. Pensions Paid at the Account of the State Budget
2.4. The Minimal Pension and Guaranteed Minimum
2.5. Pension Indexing

3. The Present-Day Demographic Setting
3.1. General Population Changes
3.2. Fertility
3.3. Mortality and Life Expectancy
3.4. Population Growth and Migration
3.5. The Base Demographic Forecast

4. Demographic Trends in the Economic Activity of the Population
4.1. Demographic Factors Affecting the Number of Population at the Economically Active Age
4.2. The Profiles and Dynamics of the Economic Activity of the Population
4.3. Projection Scenarios for the Economic Activity of the Population

5. General Employment Issues

6. Payers of Pension Contributions
6.1. The Profile and Number of Pension Contribution Payers
6.2. Projection Scenarios for Insurance Contribution Payers

7. Recipients of Pensions/Benefits
7.1. Profile of Pension Recipients
7.2. Old-Age Pensioners
7.3. Invalidity Pensioners
7.4. Recipients of Pensions for Survivors
7.5. Recipients of Social Pensions/Benefits
7.6. Forecast of Pensioner Numbers

8. Present-Day Macroeconomic Environment
8.1. Historical Background
8.2. Base Macroeconomic Forecast

9. Software Complex
9.1. Mission and Structure of the Software
9.2. Computation Scenario Block
9.3. Demography Block
9.4. Macroeconomics Block
9.5. Receipts Block (Calculation of Contributions)
9.6. Expenditure Block
9.7. Output and Reports

10. Approbation of the Model
10.1. Modelling Scenarios
10.2. Simulation Output
10.3. Computations on the Pension Calculator

Annex 1. Base scenario

Development of the Analytical Model of the Republic of Moldova’s Pension System

2.5. Pension Indexing

Moldova’s legislation stipulates that state social insurance pensions should be annually indexed. The indexing coefficient for a given year is calculated as a mean value between the average annual increase in the consumer price index and annual increase of average wages throughout the country in the previous year. It is also stipulated that the social insurance budget funds only indexing of pensions paid from this budget.

This indexing procedure has been legally applicable since 2003. Previously the law provided for pension indexing only in case if there was a 5 % increase in the inflation index. However this approach was never applied and pensions stayed unindexed, for then attention was paid primarily to settlement of pension debts and the indexing mechanism itself was not identified1. After the debts had been completely offset in 2000-2002, all pensions paid from the social insurance budget were re-counted thrice. As a result all the pensions were practically doubled by the end of 2002. Such an approach towards actualisation of pensions in Moldova was found unacceptable. Experts of the Ministry of Labour and Social Protection thought that it caused an imbalance in proportions between statutory amounts of pensions to various categories of recipients. In the course of re-counting there were established different and sometimes unreasonable amounts of increase for retirement pensions to former workers engaged in agriculture and other sectors, as well as those for invalidity pensions to invalids having different Disability Group statuses. Besides this, there changed the differentiation between amounts of pensions regulated by the Law on State Social Insurance Pensions, and amounts of pensions provided for in other laws2.

For the first time a new-type indexing took place in 2003. According to the law all the pensions were to be indexed by 19.3 %. However certain limits for pension growth were established. First of all, only that portion of a pension was liable to indexing which did not exceed the total amount of 3 minimal retirement pensions. Besides this, the amount of increase for retirement pensions should be at least 50 Lei. The minimal pension was also indexed, and its amount rose up to 185 Lei (with the exception of agricultural workers). As a result, gains of small pensions’ recipients were the greatest.

Certainly, such an indexation accompanied with fixing upper and bottom limits cannot be recognised as complying with the statutory procedure of pension indexing. On the other hand, one may understand the authorities’ wish to raise, even under conditions of short resources, living standards for pensioners with minimal means of subsistence. But one needs also to bear in mind that such indexing schemes would mean an egalitarian approach to pensions.

1. Annual Social Report of the Ministry of Labour and Social Protection of the Republic of Moldova, 2002.

2. Annual Social Report of the Ministry of Labour and Social Protection of the Republic of Moldova, 2002.

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