The new Pension Law, to be enforced as of September 2024, was designed to achieve fairer compensation for retired persons, based on their contribution to the pension fund, but it adds a significant cost of 0.5% of GDP this year and 1.5% of GDP for the next three years, according to the data published by the Government in several press conferences these days and compiled by Ziarul Financiar.

Furthermore, the higher pensions are likely to directly impact private consumption with the result of increased demand-side inflationary pressures.

Romania’s public pension fund was already heading toward a deficit of RON 21 billion (EUR 400 million) this year, while the new Pension Law is adding another RON 10.5 billion.

The supplementary disbursements generated by the new Pension Law are in the range of RON 33 billion-RON 36 billion per year over the next three years. It decreased afterwards, to RON 23 billion in 2008.

The Government has completed the recalculation of pensions, Prime Minister Marcel Ciolacu and Labor Minister Simona Bucura-Oprescu announced on August 14. Thus, from September 1, more than 3.8 million pensioners will receive higher pensions through a budgetary effort of RON 10 billion (September - December).

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iulian@romania-insider.com