Preliminary assessment of the third payment request of Romania (2024)

No. 282/2023 entered into force on 1 January 2024.

The new legislative framework shall review special pensions and bring them in line with the contributory principle.

The new legislative framework reviews special pensions and establishes through several articles, as outlined below, that special pensions are calculated based on the contributory principle, seniority in the profession and readjustment of the percentage related to the obtained income. The contributory principle requires that pension benefits will depend on the sum of contributions paid during working life. Key parameters like the standard retirement age, the length of the working life, the minimum contribution period, the benefit ratio and the base to which it applies are important to assess whether a pension system is based on the contributory principle. Law No. 282/2023 introduces changes bringing the calculation of special pensions more closely linked to the contributions paid during the working life, and therefore in line with the contributory principle.

• - No new categories of special pensions shall be created and current categories shall be

streamlined.

Law No. 282/2023 does not create any new special pension category.

Moreover, as outlined below, the Law includes several articles introducing changes that bring the calculation of special pensions more closely linked to the contributions paid during the working life, and therefore in line with the contributory principle. All articles of the Law ensure that features of the different special pension regimes will over time converge towards those prevailing in the general system, leading to a gradual streamlining of special pension regimes. In particular, the reform tightens eligibility conditions for retirement and foresees a gradual increase in the standard or statutory retirement age for all special pensioners, to ultimately align it with that in the general pension system (Articles I, Article VI, Article VIII, Article IX, Article XI, Articles XII and XIII, Article XIV).

For most special pension categories, the target benefit ratio (or replacement ratio, defined as the ratio of pension benefits to salaries earned during a specific period of an individual’s working life) will be reduced from 80% currently to 65% after the reform. For several special pensions categories, the reform foresees a gradual increase in the number of months which form the basis for the calculation of the benefit ratio, reducing the gap between pensioners in the general regime and those benefitting from special regimes. These changes are supported by the same articles mentioned in the previous paragraph.

These changes, and those listed below, imply that over time the special pension regimes will converge towards the general system, leading to a gradual streamlining of special pension regimes. The World Bank Report (see charts in pages 23 and 39 of the report, and tables in the Annex) provide quantified evidence of this convergence.

• - Current special pensions shall be calculated based on the contributory principle, seniority in the

profession, and the readjustment of the percentage related to the obtained income.

The new legislative framework reviews special pensions and establishes through several articles, as outlined below, that special pensions are calculated based on the contributory principle, seniority in the profession and readjustment of the percentage related to the obtained income. The contributory principle requires that pension benefits will depend on the sum of contributions paid during working life. Key parameters like the standard retirement age, the length of the working life, the minimum contribution period, the benefit ratio and the base to which it applies are important to