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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

8. Present-Day Macroeconomic Environment

8.1. Historical Background

Development of a long-term macroeconomic forecast is a rather complex problem in Moldova with its transitional economy. Forecasting is usually based on long-term tendencies (trends) determined owing to the previous experience analysis and assumption that in future these trends would stay unchanged or change slightly. However in countries with a transitional economy, as in the case of Moldova, this approach does not usually work for the instability of the basic macroeconomic indicators (e.g. see Figs. 8.1 and 8.2). In these conditions it makes sense to turn to such a source of a priori information as tendencies/experience of countries with stable economies or macroeconomic projections/plans of the Moldova’s Government.

Fig. 8.1: Annual rate of inflation

Table 8.1 exhibits projections of basic macroeconomic indicators for 2004-2008 made by the Ministry of Economics of the Republic of Moldova. Let us see how these projections correlate with the worldwide experience. Table 8.2 shows the wage growth in USA, United Kingdom, Germany, and Japan in 1953-1995, i.e. over the period similar in duration to the required depth of forecasting financial indicators of a pension system. While in USA real rates of wage growth averaged to 1 %, in UK the figure was 3.6, in Germany – 4.8, and in Japan – 5.2 %.

Fig. 8.2: Real rates of GDP growth

Table 8.1: Macroeconomic indicators for 2004-2008


Indicator

Measurement unit

2004

2005

2006

2007

2008

Nominal GDP

Billion lei

32.0

37.0

42.0

47.0

52.0

Real GDP growth

%

7.3

6.0

5.5

5.5

5.0

Average annual rate of inflation

%

12.4

10.0

8.0

6.5

5.5

Average annual rate of exchange

MDL / USD

12.3

12.4

12.6

12.8

13.2

Rate of exchange at the end of year

MDL / USD

12.5

12.5

12.7

13.0

13.3

Annual wage-bill

Billion lei

8.6

10.5

12.6

14.8

17.1

Average monthly wage

Leu

1,104

1,385

1,685

2,020

2,380

It is clear that it will be practically impossible to maintain annual rates of real wage growth at the level of 12-14 % projected by the Moldova’s Government for the 50 year period. Hence when developing macroeconomic scenario parameters we supposed that annual rates of real wage growth would be going down to 3.0 % by 2030 and further varying within the range of 2.5-3.0 %, the scenario being in line with the historical background of developed countries.

Table 8.2: Real wage growth and yield on government bonds and shares (adjusted for inflation)1, 1953-1995, %

 

Germany

Japan

USA

United Kingdom

Wages

4.8

5.2

1.0

3.6

Government bonds

3.9

3.8

2.3

1.0

Shares

10.1

10.8

9.8

10.8


1. Thompson, L., Older and Wiser – the Economics of Pension Reform, The Urban Institute Press, Washington, D.C., 1998.


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