Home
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

7. Recipients of Pensions/Benefits

7.1. Profile of Pension Recipients

In accordance with Moldova’s pension law all the pensions subdivide into the following types:

  1. old-age pensions (or retirement pensions), including those assign:
    • on general terms,
    • on preferential terms;
  2. invalidity pensions (or disability pensions);
  3. survivor’s pensions;
  4. long-service pensions;
  5. pensions to former Parliament and Government members, public employees, and local elected officials;
  6. pensions to persons who took part in emergency relief operations at the Chernobyl Nuclear Power Plant;
  7. pensions to former military servicemen;
  8. social pensions/benefits.

It needs to be underlined that retirement, survivor’s, long-service pensions, as well as a certain portion of a pension to members of Parliament and Government, public employees, and persons in elective offices with local administrative bodies are paid at the expense of social insurance funds, i.e. owing to insurance contributions.

Pensions to participants of emergency relief operations at the Chernobyl Nuclear Power Plant, former military servicemen, social pensions (benefits), and certain portions of pensions to parliamentarians, members of the Government, public employees, and local elected officials are paid by means of transfers from the state budget. In this way expenditure for so-called ‘non-insurance’ periods is also funded, as well as state social assistance benefits to persons taking care of invalids since childhood or disabled children, personal allowances for meritorious service to the state, targeted compensation, etc. Transfers are also intended to meet deficits of the state social insurance budget if any emerge.

Pensions funded by means of insurance contributions are of special interest for the analysis. As a matter of a fact it is these pensions that are considered when balancing the pension insurance system. Besides this, they make up the ‘lion’s share’, or around 98 %, of the total expenditure for the pension provision scheme in Moldova.

In this regard, there have been sorted out the following pension recipient’s categories:

  1. old-age pension recipients who are a group among pensioners formerly unengaged in agriculture (hereinafter referred to as recipients of non-agricultural pensions, or non-agricultural pensioners);
  2. old-age pension recipients who are a group among pensioners formerly engaged in agriculture (hereinafter referred to as recipients of agricultural pensions, or agricultural pensioners);
  3. invalidity pension recipients (or invalidity pensioners);
  4. survivor’s pension recipients (or survivors);
  5. recipients of social pensions/benefits (or social pensioners);
  6. other recipients of old-age pensions (or other old-age pensioners).

The ‘recipients of non-agricultural pensions’ category includes all recipients of old-age pensions assigned both on general and preferential terms, who are not former agricultural workers. Besides them this category holds recipients of long-service pensions.

The ‘recipients of agricultural pensions’ category includes recipients of old-age pensions assigned both on general and preferential terms, who were formerly engaged in agriculture. These are, first, persons who were employees working on individual contracts and whose insurance contributions were paid by their employers; second, land-owners either having or not their land leased out; and, third, land-tenants holding their agricultural land on lease or land-use contracts.

The ‘recipients of invalidity pensions’ category includes invalids with a total or partial loss of capacity to work, caused by a systemic disease, severe workplace injury, or occupational disease.

The ‘recipients of survivor’s pensions’ category embraces pension recipients whose deceased bread-winners were pensioners or had entitlements to pensions.

‘Recipients of social pensions/benefits’ form a separate category, as they are of big social significance and rather numerous (from 3.5 to 6.5 % according to different sources), despite the fact that their pensions/benefits are funded by means of transfers from the state budget.

The ‘other recipients of old-age pensions’ category incorporates former Parliament and Government members, public employees, and local elected officials. Pensions to members of this category are funded by both insurance contributions and the state budget. This section will consider just a portion of them financed at the expense of social insurance funds, i.e. owing to insurance contributions.

Analysis to follow will not deal with recipients of ‘military’ pensions and pensions paid to participants to emergency relief operations at the Chernobyl Nuclear Power Plant, as well as with recipients of all other allowances made at the expense of the state budget funds, e.g. monthly state allowances for taking care of invalids since childhood or disabled children, for meritorious service to the state, targeted compensation, etc.

According to the Moldova’s National Social Insurance Fund’s data delivered by Annual Social Report for 20031, in 2003 the total number of pensioners was distributed by recipient category in conformity with the profile exhibited in Table 7.1.

Table 7.1 shows that 98.3 % of all the Moldova’s pensioners receive their pensions in compliance with the Law On State Social Insurance Pensions and therefore are financed owing to insurance contributions. Old-age pensioners comprise the greater portion, 74.2 % of the total number of pensioners, while invalidity pensioners – 18.7 % and survivors – 5.3 %. Pensions for long service are assigned in accordance with the Law On State Social Insurance Pensions (in cases with former civil aviation and rail transport workers, artists, and geologists) and other laws (e.g. pension provision for medical workers and teachers). However the latter pensions are paid at the expense of insurance contributions and they are, in essence, kind of old-age pensions, though assigned on preferential terms, i.e. before attaining the statutory age of retirement. Members of this category make up just an insignificant portion of the total number of pensioners, 0.87 %. For this reason they will be further dealt with as members of the main category of ‘recipients of old-age pensions’.

Table 7.1: Numbers of pension recipients, by category of pensions, in 2003

Category of pensions

2003

persons

%

Total number of pensions assigned in accordance with the Law On State Social Insurance Pensions

616,632

98.26

  1. old-age pensions

465,792

74.22

  1. invalidity pensions

117,085

18.66

  1. survivor’s pensions

33,019

5.26

  1. long-service pensions

736

0.12

Pensions assigned in accordance with other laws

10,921

1.74

  1. pensions to participants to emergency relief operations at the Chernobyl Nuclear Power Plant

2,185

0.35

  1. pensions to military servicemen

2,437

0.39

  1. long-service pensions

4,692

0.75

  1. pensions to former Parliament and Government members, public employees, and local elected officials (primars)

1,607

0.26

Total number of pensioners

627,553

100.0

Source: National Social Insurance Fund
The least numerous category consists of ‘other recipients of old-age pensions’. In 2003, according to the National Social Insurance Fund’s data, they numbered 1607 persons, or 0.26 % of all the pensioners.

Hence the National Social Insurance Fund’s information makes it possible to sort out and evaluate numbers of pension recipients for the majority of categories taken in the model.

Unfortunately this statistics offers no information on recipients of social pensions/benefits; the fact probably may be linked with the re-classification of social pensions into social benefits, which Moldova has performing since 1999. Social pensions assigned prior to 1st January 1999 are still paid to their recipients from the state budget. Since 1999 persons, ineligible for pensions within the social insurance scheme, have been assigned social benefits instead of pensions. For this reason there have been two concurrent types of social allowances, viz. social pensions and social benefits, both intended for equal categories of recipients, both meeting the same requirements in regard of the right to each of these allowances2.

Since both social pensions and social benefits are assigned and paid to similar categories of recipients and are funded from the same source they will be hereinafter combined into a single category, namely ‘recipients of social pensions/benefits’. In 2003 it included 42,481 persons in total (see Table 7.2 showing trends in numbers of persons receiving state social pensions/benefits3).

Table 7.2: Numbers of state social allowances


State social pensions/benefits, by type

Quantity of recipients, pers.

2000

2001

2002

2003

Social pensions

22,250

20,815

18,480

Social benefits

16,084

20,084

23,170

 -

Total

38,334

40,899

41,650

42,481

When determining structure of pension recipients, a trouble is to sort out old-age pensioners into the categories of ‘old-age pension recipients, former non-agricultural workers’ and ‘old-age pension recipients, former agricultural workers’. It turned out, that such a differentiation cannot be performed with the available National Social Insurance Fund’s information which was obtained through monitoring the composition and total numbers of pensioners and used in distributing pensioners per pension recipient categories taken in the model. Nevertheless Annual Social Report for 2002, issued by the Moldova’s Ministry of Labour and Social Protection, has presented a detailed analysis of the pension provision conditions in the agricultural sector, which contains statistical data enabling us to make an estimate of the ratio between old-age pensioners formerly unengaged in agriculture and old-age pensioners formerly engaged therein. Table 7.3 exhibits data on numbers of old-age pension recipients in 1997-2002, divided according to their former relation to agriculture.

Table 7.3: Numbers of the old-age pension recipients and their distribution according to their previous relation to agriculture, 1997-2002

 

1997

1998

1999

2000

2001

2002

Old-age pensioners – Total, ‘000 pers.

560.5

555.4

529.4

514.6

495.8

484.3

Old-age pensioners, non-agricultural

324.9

324.2

308.30

300.50

161.70

160.1

Old-age pensioners, agricultural

235.6

231.2

221.10

214.10

334.10

314.3

 

 

 

 

 

 

 

Total, %

100.00

100.00

100.00

100.00

100.00

100.00

Old-age pensioners, non-agricultural

57.97

58.37

58.24

58.39

32.61

33.06

Old-age pensioners, agricultural

42.03

41.63

41.76

41.61

67.39

64.9

The above data show a growth in numbers of agricultural old-age pensioners over the period, which took place against the background of the declining quantity of all old-age pensioners since 1999 when the Law on State Social Insurance Pensions was adopted which provided for an older statutory age of retirement and longer minimal required length of service. Over the period of 1997-2002 the total number of old-age pensioners decreased by 13.6 % while that of old-age pensioners formerly engaged in agriculture rose by 33.4 %. It looks natural that the share of agricultural pensioners in the total number of old-age pensioners has considerably increased too. Over the same period it rose from 42.0 to 64.9 %. In 2001 there was a serious growth in numbers of agricultural old-age pensioners caused by the fact that “state pensions to their recipients previously working at state farms (sovkhozes) and plants processing agricultural products were re-calculated by standards as those provided for agricultural workers”4.

We had no statistical data on the ratio between agricultural and non-agricultural pensioners in 2003 and had to use the relevant proportion from the 2002 profile. As a result, the total quantity of old-age pensioners was divided between the two categories in the proportion of 60 to 40.

Accuracy of these estimates may be confirmed by comparing the old-age pensioner profiles calculated according to data of the National Social Insurance Fund for 2003, on the one hand, and the same year’s data received from the Pension Payment Database, on the other hand. Results of this comparison are shown in Table 7.4 and they tell that the two profiles comply with each other well enough.

In this manner the above-mentioned analysis made it possible to build the required profile of pension recipients (see Table 7.5). Besides the pension recipient profile calculated on the basis of the National Social Insurance Fund’s statistical data for 2003 this Table presents, for comparison, similar data obtained from the Pension Payment Database. Comparison of these data confirms that calculations concerning the differentiation of the total number of pensioners by pension recipient category are correct.

Table 7.4: Profile of old-age pension recipients


Pension types

Pensioner numbers

calculated according to the National Social Insurance Fund’s data

calculated according to the Pension Payment Database’s data

pers.

%

pers.

%

Old-age pensions - Total

471,220

100.0

439,655

100.0

Old-age pensions to non-agricultural workers

188,488

40.0

194,869

44.3

Old-age pensions to agricultural workers

282,732

60.0

244,786

55.7

Table 7.5: Profile of pension recipients


Pension recipient categories taken for the model

Pensioner numbers

as calculated according to the National Social Insurance Fund’s data

as calculated according to the Pension Payment Database’s data

pers.

%

pers.

%

Old-age pensions to non-agricultural workers

188,488

28.33

194,869

31.53

Old-age pensions to agricultural workers

282,732

42.49

244,786

39.61

Disability pensions

117,085

17.60

108,363

17.54

Survivor’s pensions

33,019

4.96

28,752

4.65

Social pensions

42,481

6.38

39,681

6.42

Old-age pensions to other recipients not elsewhere specified

1,607

0.24

1,527

0.25

Total

665,412

100.00

617,978

100.00

It should be noted that statistics of the National Social Insurance Fund contain no data on differentiation of pensioner numbers by sex. For this purpose data of the Pension Payment Database for 2003 have been used. They are shown in Table 7.6.

Table 7.6: Differentiation of pension recipients by sex

Pension recipient categories taken for the model

Quantity of pensioners

Total

including:

men

women

pers.

%

pers.

%

Old-age pensions to non-agricultural workers

194,869

61,705

31.66

133,164

68.34

Old-age pensions to agricultural workers

244,786

82,025

33.51

162,761

66.49

Invalidity pensions

108,363

52,775

48.70

55,588

51.30

Survivor’s pensions

28,752

22,980

79.92

5,772

20.08

Social pensions

39,681

19,129

48.21

20,552

51.79

Old-age pensions to other recipients not elsewhere specified

1,527

715

46.82

812

53.18

Total

617,978

239,329

38.73

378,649

61.27


1.Annual Social Report, Republic of Moldova, 2003, Annex 3.1, Chisinau, 2004.

2. Annual Social Report for 2002, Republic of Moldova, Ministry of Labour and Social Protection, Chisinau, 2003, p. 73.

3. Annual Social Report, Republic of Moldova, 2003, Chisinau, 2004.

4. Annual Social Report for 2002 of the Ministry of Labour and Social Protection of the Republic of Moldova, Chisinau, 2003, p. 60


Назад К оглавлению Вперед

© Independent Actuarial Information-Analitical Center
Office 342, Building 3a, 1 Khoroshiovsky Proezd, Moscow, 125284 Russia
Tel./fax: (7-495)255-63-08, e-mail: Chief@actuaries.ru