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The pension scheme will be reviewed, the aim is to increase benefits for those who receive less

2023-11-08 09:55:00, Ekonomi CNA

The pension scheme will be reviewed, the aim is to increase benefits for those

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The reform of the pension scheme is under revision in order to establish an approach which will square the differences of the annual indexation of pensions.

The news was given by the Minister of Economy and Finance, Ervin Mete in the Parliamentary Committee on Economy during the discussion of the 2024 draft budget.

Mete said that the changes are in the consultation phase with the World Bank and the Monetary Fund and they are taking into consideration the demographic changes and the effects they will create in the progress of the number of contributors and beneficiaries in the future. The minister said that they are working on an approach that amortizes the differences.

Monitor sources claimed that they are working on major changes that are in the consultation phase.

- First, a formula is being worked on to enable the increase of low pensions with a greater value than the 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 paid 30,000 allek per month benefited from an additional 2,560 allek or three times higher.

-Secondly, what to do with the intervention in setting the limits for the benefits in the supplementary schemes, since their growth at the current rates is expected to burden the scheme more in the long term. For example, in the future, the retirement of employees of the justice system may cost the public pension scheme.

Currently, the public pension scheme is under pressure to increase the number of beneficiaries because this decade the generation of the birth boom in the 1970s retires, and on the other hand the number of contributors will mature due to the decline of the young age group. population from declining births and high emigration.

As wages have increased in the public and private sectors, causing further price increases, pensioners' incomes not only did not increase, but they became the main victims of inflation.

In 2018, the average pension was 31 percent of the average gross salary, while in the first 6 months of 2023 this ratio reached 25%.

The percentage of people who do not meet the criteria for full payment is increasing rapidly from year to year. In June 2023 part-paid pensioners accounted for 50% of total old-age pensions, up from 45% in 2021. While the new pensions associated with 2023 were 11% lower than the average pension. Old-age pensions are 50% lower than the regional average./Monitor