Академический Документы
Профессиональный Документы
Культура Документы
of Moldova
Individual work
Theme: Pension funds
Situation analysis
The public social insurance system is an integral part of the state social protection system, with the main
objective of providing cash benefits to insured persons who are unable to obtain wage revenues due to
certain risks (aging, temporary or permanent lack of working capacity, maternity, unemployment, etc.)
and is based on collection of social insurance contributions from employers and insured persons and
distribution of benefits to beneficiaries.
The pension system in Moldova operates based on the pay-as-you-go scheme, which consumes 8.8% of
GDP. In 2010, only about 37.5% of the working population was contributing to the social security system,
and pensions were paid for about 84% of citizens who have reached the retirement age, i.e. a total of
460,500 people, or 13% of the total population. Thus, the pension system has a significant role in
ensuring a decent standard of living for the population. In 2011, expenditures for payment of pensions
were about 70% of the total social security budget.
Demographic ageing
The further development of the public pension system will worsen due to demographic trends. The ratio
of population aged over 60 years to the total population was 14, 4% in 2010 compared to 13, and 6% in
2000. According to international practice, a population is considered "ageing" when the ratio of elderly
exceeds 12%.
both men and women. On the other hand, life expectancy in Moldova is also lower compared to those
countries.
Strategic vision
An equitable and sustainable pension system ensuring a decent living after retirement is indispensable for
social cohesion. The current inadequate level of pensions in Moldova and its continuing diminishing trend
generate an alarming growth of pressure. The funding of any pension increases from outside the pension
system reduces the chances of success of other reforms, including those of other development priorities.
Thus, the pension reform will primarily minimize the risk of these adverse effects.
The cumulative pension system has a positive impact over long term on economic growth mainly
due to the following factors:
1. Financial market development. Under the cumulative pension system social contributions are invested
using financial markets, which get a significant boost as a result of pension system reform, and financial
market development is positively associated with growth. Financial market development is seen as a
reward to the reform transition costs that, according to the experience of other countries, vary from 0.5%
to 4% of GDP annually depending on the parameters of the pension system reform.
2. Labor market optimization. In pay-as-you-go pension systems social contributions are often treated as
taxes, this amplifying the negative phenomena of salaries paid in envelopes and illegal work. Also, in
pay-as-you-go pension systems staff pre fers early retirement, and labor force mobility is reduced. All
these have a negative impact on labor market operation. The structure and operation of the cumulative
pension system leads to a reduction of these deficiencies, hence contributing to labor market optimization,
which sets the ground for economic growth.