The imbalance between workers and retirees is "concerning"

The imbalance between the number of employees and the pensioners is already alarming and will increase more and more in the coming years – draws the attention of the management and supervisory organizations of pension funds, which calculate that the employed persons with the age of 40 will get with the current resources only 15 per cent of the final salary when they retire.

The warning comes with the recommendation that young employees should create savings accounts that would provide additional retirement income.

Experts point out that in the absence of a saving system regarding the supplementation of the retirement income, Romanians are likely to face a very low standard of living in old age, and this is because the public pension system will not cope, for reasons related mainly to the large difference between contributors and beneficiaries of social benefits, the issues of aging and increase life expectancy, but also migration.

The President of the National Public Pension Ileana Ciutan, points out that although redirecting a portion of the contribution to the private pensions initially led to a widening deficit of the pension system in the long term, there are significant advantages.

"They laid the groundwork for a system based on capitalization, to provide additional income in old age and have laid the groundwork for changing the mentality of active persons, especially young people, who should learn financial literacy and how to save money, who also should take responsibility for ensuring future revenue and an adequate financial support in old age "said Ileana Ciutan.

The President of the Private Pension System Supervisory Ion Giurescu, also points out that the present monthly average contribution of eight euros for the mandatory private pensions is very low and the Romanians, especially the young ones, should be encouraged to open individual accounts in the voluntary private pension system.

"If we have a low average return of 3.5 per cent, in 20 years the deposited money will be double with an easy reached return, in 20 years. Speaking honestly, around the world the average return is about 4% in a long period of time, "said Ion Giurescu.

Romania is the last country in Central and Eastern Europe to introduce the compulsory private pension system, which took effect in 2007.

Since then, only 3.6 million Romanians that are constantly submitting amounts of money in those accounts have been drawn into the system.

Translated by
Mariana Rotărescu