The rural insurance scheme is balanced, the number of contributors is reaching the beneficiaries

2024-01-26 11:10:00, Ekonomi CNA

The rural insurance scheme is balanced, the number of contributors is reaching

Illustrative photo

The rural pension scheme, which suffered from a low contributor-beneficiary ratio, is moving towards balance.

According to official data from the Institute of Social Insurance, the number of rural pensioners reached 88,8 thousand in the middle of 2023, and on the other hand, the number of contributors from the agricultural sector reached over 81 thousand people in the same period. While in the middle of 2022 there were 62,504 contributors and on the other hand there were over 91 thousand rural beneficiaries.

Official data show that at the end of the first half of 2023 in rural areas of the country, the number of old-age pensions was 88,800 with a decrease of about 35 percent compared to 2013.

On the contrary, pensioners in the urban areas of the country have been increasing. Official data show that in the middle of 2023 there were 491 thousand pensioners in urban areas with a 57% increase compared to 2013.

Due to demographic developments, where the birth boom after the Second World War is reaching retirement age, the elderly should be increasing in the countryside as well. But the rural areas of the country during the years of transition have moved to emigration or to the cities. Most of the rural labor force is self-employed in unpaid agriculture. A large part of them have not paid social security and risk extreme poverty.

So the government is revising the pension scheme in order to find an approach, which will square the differences of the annual indexation of pensions.

The changes are in the consultation phase with the World Bank and the Monetary Fund and are taking into consideration the demographic developments and the effects they will create on the progress of the number of contributors and beneficiaries in the future.

A formula is intended to enable the growth of lower pensions with a greater value than higher ones. Currently, indexation is applied as a percentage of pensioners' inflation. This year, 8.6% was applied, but translated into value, the benefit is much smaller for low pensions than for high ones. For example, a pensioner in the village who is paid 10,000 allek per month, received an increase in October 2023 of only 860 allek, while a pensioner who is paid 30,000 allek per month, benefited from an additional 2,560 allek, or three times higher.

Another intervention has to do with setting limits for benefits in supplementary schemes, as their growth at current rates is expected to burden the scheme more in the long term./ Monitor