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

4.3. Projection Scenarios for the Economic Activity of the Population

Projecting the number of the economically active population suggests, first of all, the knowledge of two basic parameters: the number of persons in the corresponding gender and age groups and the level of their participation in the economy. Projected number of the population is based on demographic forecasts, whereas the projected dynamics of the level of activity depends on the theories used. Considering that the gender and age characteristics of the level of activity are endogenous parameters (a shortage of workforce tends to raise the price of labor thus leading to greater participation, whereas rising unemployment rates, on the contrary, entail reduced participation in the workforce), long-term projections of the economic activity of population appears to be an extremely difficult task.

Simplifying this task, let us assume that in a stable economy the levels of participation are slow-moving in the medium term. Therefore, they can be assumed equal to the participation levels for the latest reporting year or to the average values of the participation levels over the latest reporting period. The first option seems more appropriate in the case of the Republic of Moldova because it can be assumed that prior to 2004 the labor market was asymptotically approaching its new equilibrium.

However, it can also be assumed that participation levels do not remain unchanged in time. If so, the levels of participation are the indicators to be projected. What additional alternative scenarios might seem feasible in that case? There are basically two of them:

  1. proportional changes in the activity levels for all groups of the population that are supposed to gradually approach the activity levels observed in Central European countries;
  2. increased activity of senior age groups related to the ongoing pension reform and the introduction of an older retirement age.

The base projection scenario for the number of the economically active population, presented in Figure 4.6, is based on the assumption that its dynamics will be exclusively determined by demographic parameters, i.e.:

  1. that the levels of participation of the population (by socio-demographic groups) have reached their new equilibrium levels in 2004 and are unlikely to change in the future;
  2. that, considering the very low initial level of personal incomes, the impact of increased personal income on labor supply will be insignificant in the foreseeable future;
  3. that any significant decrease in the future level of participation of young people in the economy will be insignificant as their possible non-participation due to studying at high school, college, or university will be compensated for by students seeking part-time employment;
  4. and that there will be no increase in the participation of senior age groups. 

The anticipated increase in the number of the economically active population will therefore be accounted for mainly by the impact of the cohort effect (see Figure 4.2), which will cease in 2014. Let us note that the increase in the number of economically active men and women will stop at about the same time (see Figure 4.1).

Fig. 4.6. Dynamics of the economically active population

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