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Premier Boc: Pension Law, A Step Forward in Romanian State’s Reform
Financiarul.ro
September 17, 2010
Romania
Prime Minister Emil Boc considers that the Uniform Public Pension Law that cleared the Chamber of Deputies on Sept. 15 is a first step forward in the reform of the Romanian state and also the first move towards narrowing pension budget deficits in the medium and long term, as well as achieving an act of social justice by imposing the collect-as-you-pay principle.
“The reform of the pension system, which includes two laws – Law No. 119 / 2010 and the law passed yesterday (Wednesday – Ed. Note) – bring justice into the pension system.
When I say justice I mean that luxury pensions were done away with, that secondly, the collect-as-you-pay principle was enforced and thirdly, through its mechanisms, the law ensures medium- and long-term support for pension budgets, even if next year significant amounts of money will still have to be transferred from the state budget to support the pension budget,” the head of the government explained on Thursday in Iasi (eastern Romania).
Boc mentioned that if the Chamber of Deputies would not have adopted the pension law in the form that cleared the House on Wednesday and if the Opposition would have had its way, the deficit would have deepened in 2010 and especially in 2011, when 5 billion euros should have been fed into the pension budget from the state budget, money that should have been taken from the co-financing of EU funded projects, the Education and Healthcare budgets.
According to the law version that cleared the House, Emil Boc argued, just a little over three billion euros will be needed in 2011 to support the budget. “In 2014 we would have needed 6 billion euros, had the Opposition pushed its variant through.
This money should have been taken from Development and this would have compromised the country’s economic growth chances. It was a rational decision, which reforms the pension system, just as all pension systems in Europe are now being shaken up in a direction that can be maintained on the medium and long term.
This is why I sense that an act that scraps luxury pensions is an act of justice for the 22 million Romanians as well as a measure aimed at financially supporting the social security budget,” said Emil Boc.
Asked if he does not consider that 65 is too old an age for retirement, the Prime Minister replied that “the pension budget feeds on contributions” and that the pension plan depends on how much each of us works according to the collect-as-you-pay principle.
“If we all want to retire as soon as possible, will you please tell me who is to contribute for the pensions to be duly disbursed? It’s easy. You don’t need to be a great mathematician to do such an analysis.
We reached a rational, correct decision for today’s retiree to be able to collect a pension. If we take populist, short-lived decisions, we can survive one, two, three days, say one whole year, but then we will no longer be able to support the pension system over the medium and long term,” argued the Prime Minister.
The Uniform Pension System Law on Wednesday evening cleared the plenary meeting of the Chamber of Deputies by a vote of 170 to 2 and three abstentions, in absence of the MPs of the opposition’s National Liberal Party (PNL) and of the PSD + PC (Social Democratic Party + the Conservative Party) Alliance.
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