Romanian state pensions will rise twice in 2024, Prime Minister Marcel Ciolacu said on Thursday, beginning in January when they will be indexed by 13.8% and again in September when they will be recalculated based on a pending bill, according to Reuters.
Under Romania‘s European Union funds recovery package, the EU state has committed to change the state pension law to eliminate inequalities and remove election-driven political decisions from the hiking process.
Romania holds local, parliamentary, presidential and European elections in 2024.
“We are the first government to index and recalculate in the same year,” Ciolacu said at the start of a cabinet meeting. “But we need to approve this law in parliament by Nov. 20.”
The new pension bill will introduce a new way to calculate pensions with clear indexing criteria to prevent unstable hikes.
The recalculation slated for September 2024 will eliminate inequities by ensuring people who worked the same job for the same amount of years will get the same pension. Labour Minister Bucura Oprescu has said a little over 3 million pensions will rise following recalculation.
The bill will also gradually raise the retirement age for women to 65 from 63 at present, give incentives to people who want to work past the contribution threshold and ensures better pensions for the elderly living below the poverty threshold.
The impact of the two 2024 hikes is estimated at around 30 billion lei ($6.42 billion).
The last major pension reform in Romania occurred during a 2009-2010 IMF-led aid deal, when the retirement age was raised to 65 for men and 63 for women, and some spending caps were enforced. Since then, most changes to the pension system involved undifferentiated hikes.
Pension reform is all the more important as the number of retirees is due to skyrocket after 2030 as a result of a notorious communist-era birth policy.
In 1966, dictator Nicolae Ceausescu outlawed abortion via decree to boost Romania’s labour force. Just under 2 million Romanians, or 10% of the population, known as “decree babies” will reach retirement age after 2030. The country currently has around 5 million pensioners.