What will change in the new pension scheme

2024-11-17 22:00:00, Ekonomi CNA

The Deputy Minister of Economy, Culture and Innovation, Olta Manjani, who is part of the working group that is working on the changes being made in the Insurance Law, said that the review of the scheme consists in developing the principle of sufficiency, ensuring benefits higher, mainly for pensions from the mandatory scheme, as well as for the most vulnerable categories, such as persons receiving disability pensions and family pensions.

All the problems facing the public pension scheme and the solutions being discussed...

What are the main goals of the changes in the Social Security Law and what are they expected to bring to the pension system ?

The main changes in the reform being studied for the pension scheme consist in the development of the sufficiency principle, ensuring higher benefits mainly for pensions from the mandatory scheme, as well as for the most vulnerable categories, such as persons receiving disability pensions and family pensions.

Currently, in the disability pension scheme, there are many citizens who benefit from a low pension measure even below the income level that benefits from the disabled category from the social service scheme.

However, the pension scheme is a scheme that provides universal coverage, where even third-age individuals, when they reach the age of 70, regardless of whether they have not contributed a single working day, or have not met the minimum years of pension benefit (15 years ) benefit from a pension, what is called a social pension.

Can you describe the current problems of the pension system in Albania and how the reform you are discussing will address these issues?

Albania is facing a demographic aging of the population, where, based on forecasts, there will be a high increase in the long-term dependency ratio of the elderly in judgment and the level of immigration in three decades of people of working age, low level fertility, as well as increasing life expectancy.

The coverage rate of contributors to the pension system within the working age population is low.

We are facing the phenomenon of lower scheme coverage with contributors and higher coverage with beneficiaries.

Added problems are also the coverage periods with contributions, if all working individuals do not contribute enough years to meet the minimum seniority condition of 15 years, an increased pressure will be exerted, increasing the number of people who will enjoy a social pension.

What will change in the new pension scheme

Deputy Minister of Economy, Culture and Innovation, Olta Manjani

The low level of coverage with contributory periods directly affects the low levels of pension measures that are benefited, a fact that is also judged by the level of the average pension, evaluating only the category of young pensioners, who do not have contributory periods, mainly periods after of 1994.

About 80% of the new pensions that are linked are partial pensions, meaning that they have not completed the full years of pension benefits (38 years).

On the other hand, we have a high number of pensioners in relation to the population, compared to other countries, also due to the fact that in the first years of the transition, thousands of citizens retired 5-10 years earlier and were left without work, as a result of the collapse of the previous system.

How will this reform be financed and will there be additional costs for the government?

For the financing of the reform, wider measures should be taken in factors such as:

– Increasing the fertility rate

- Increasing the number of contributors by strengthening the control exercised over employer entities to reduce informality

- Increasing the declared salary for the payment of contributions.

After a comprehensive action in various areas, the additional costs of financing the reform by the government will be lower in the long run.

Will there be changes in the criteria for benefits, such as p . sh . years of work with contributions, or even the measure of contribution for employees or employers?

Currently, several parameters are being analyzed in the judgment of:

- increasing the rate of increase in the retirement age

- the minimum age to receive a pension

– the age of benefiting from a social pension

- the benefit calculation formula for a benefit as fair as possible in relation to the contributory life developed by the individual within the benefit of a sufficient level of income.

- the level of contribution for the employee or employer categories

Also, more fundamental reforms of the pension system are being considered and evaluated, which may include the development of a multi-pillar contributory system for new contributors.

How will the reform affect the private sector and the informal economy, are there plans to encourage more people to contribute to the pension system and how will they be implemented?

As stated before, the reform does not consist only in the realization of a parametric reform for changing the pension formula, etc., the reform will consist in the undertaking of measures by all relevant actors to encourage the number of people who will contribute to the scheme and to reduce informality.

Also important is the development of an information and education campaign in the field of pensions for employers and employees, where media like you can play an important role.

How can pensioners be better protected against reduced benefits, since in 2023 , approximately 55% of pensions were partial and year after year , the criteria for a full pension are becoming unattainable by retirees?

The best protection for future pensioners from the reduction of benefits consists in covering more years with insurance, demanding their rights also against the employer entities in the realization of the declaration for the period of employment, as well as in the declaration of the real level of wages .

The defined criteria for pension in our judgment are not unattainable criteria, since these criteria have been established on the basis of a concrete analysis, as well as on the basis of the development of pension schemes in relation to other countries, as well as development factors of the population, such as the increase in life expectancy, the increase in the period of people of working age, etc.

However, the government has continuously taken measures for this category, within the framework of increasing the sufficiency of income, by providing bonuses, indexing pensions, etc.

In your opinion , should the social protection for pensioners be strengthened to avoid the poverty of this population group?

Social protection must be strengthened, but I would emphasize the fact that social protection does not mean only the pension scheme.

The pension scheme will be developed within the framework of social protection, maintaining the main principles, especially the contributory one, as well as financial sustainability in the long term, so as not to burden future generations.

Meanwhile, the Albanian state also has other mechanisms of providing social protection for many other vulnerable/vulnerable categories.

Is it thought about incentives for young people to start contributing to pension funds as early as possible?

We are currently in evaluations and I cannot express a conclusion yet, but it is being judged while also preserving the rights of young people regarding when they can be called of working age, while maintaining a balance and social justice.

Have the demographic projections changed since the last pension reform in 2014 and what should change in relation to the current scheme?

Yes, Albania is facing a demographic aging of the population. From long-term projections, the population under the age of 25 has a declining trend, the elderly population is expected to reach 43% of the population, and it is predicted that only 40% of the population in the long-term horizon will be working-age population.

In relation to the current scheme, I cannot express a definite conclusion, but I can express the fact that all the parameters and possibilities are being evaluated to develop a fair reform in the development of basic principles such as coverage, sufficiency, financial sustainability and fairness of benefit of pensions, according to different categories, considering the problems I expressed above.