The pension system in Romania is currently in the process of identifying methods and models that meet the requirements imposed by the disappearance of barriers in the flow of goods, capital and service mobility. Taking this into consideration, solutions to a more complex study of the Romanian pension system must be found.social insurance; pension system; contributions;social dimension

Stegaroiu, Valentin

English

Research Papers in Economics

A COMPLEX STUDY OF THE ROMANIAN PENSION 
SYSTEM 
Stegăroiu Valentin, University Lecturer, Ph.D  
UNIVERISTY TITU MAIORESCU BUCHAREST 
FACULTY OF ECONOMIC SCIENCES TARGU-JIU 
 
Abstract 
The pension system in Romania is currently in the process of identifying methods and models 
that meet the requirements imposed by the disappearance of barriers in the flow of goods, 
capital and service mobility. Taking this into consideration, solutions to a more complex study 
of the Romanian pension system must be found. 
 
In order to engage in a complex study of the Romanian pension system, one must begin with 
the analysis of the grand total of the pension that depends on a series of factors: the annual 
medium income of the employer, which changes for obvious reasons every year, the average 
income of the insured individual compared to the economy levels, the number of years of 
employment that constitute the compulsory length of service, the type of activity in question, 
the advantages that constitute flexibility, the level of economic development at the date of 
retirement. An original approach to the issue of calculating the pension is found in [1, p. 33]. 
By developing the original formula, we will attribute  t t x x ,  to the medium income of the 
employer, either at the level of national economy or of a particular branch,  , 
where T equals the number o years necessary to achieve the complete length of service and 
contribution. By using 
T t ..., , 2 , 1 =
t
t
x
x
 we will obtain the quota connected to the employer’s income 
compared to the average economy level in the year t,  T t ..., , 2 , 1 = . For different employers, 
in different years this rapport will also be different, bigger or smaller than 1. We will name 
these “parts” points. In the   period the employer will have totally accumulated  ( T , 0 )
∑
=
= + + + + +
T
t t
t
T
T
t
t
x
x
x
x
x
x
x
x
x
x
1 2
2
1
1 ... ...  points, the arithmetical mean being: 
⎟
⎠
⎞
⎜
⎝
⎛∑
=
T
t t
t
x
x
T 1
1
 points. 
The access to pension is the vector  ( ) A . Retiring, the insured individual  may invoke 
the right as successor, depending on a degree of disability etc. That 
is () α A A A A A i ..., , ..., , , 2 1 = . 
Therefore, depending on the nature of the activity, its importance to society, the 
danger the insured individual is susceptible to etc., the pension can be enhanced on the basis 
of the flexibility of pension law. The flexibility of pension is also a vector 
( ) β E E E E E j ..., , ..., , , 2 1 = . 
In order to introduce all possible variants concerning “access to pension”, “the 
flexibility of pension” in the calculation, we will elaborate the multiplying coefficients matrix 
; ,..., 2 , 1 , α γ = ⋅ = i E A j i ij   β ,..., 2 , 1 = j  /Table 1/. 
 Table 1. 
The multiplying coefficients matrix 
Flexibility 
Access 
1 E   2 E   ...  j E   ...  β E  
1 A   11 γ   12 γ   ...  j 1 γ   ...  β γ1  
2 A   21 γ   22 γ   ...  j 2 γ   ...  β γ 2  
M  M  M  ...  M  ...  M 
i A   1 i γ   2 i γ   ...  ij γ   ...  β γi  
M  M  M  ...  M  ...  M 
α A   1 α γ   2 α γ   ...  j α γ   ...  αβ γ  
 
Consequently, the employers, through the coefficients 
β α γ ,..., 2 , 1 ; ,..., 2 , 1 , = = j i ij , will be disfavored according to the number of points, 
accumulated during the insurance period in the ( ) T ; 0  interval. The pension by points can be 
expressed: 
⎟
⎠
⎞
⎜
⎝
⎛
= ∑
=
T
t t
t ij
ij x
x
T
P
1
γ
 points. 
One point, represented in value, in the year of retirement is estimated at 
punct
lei
V . 
So, the pension in Romanian lei will constitute:  
⎟
⎠
⎞
⎜
⎝
⎛ ⋅
= ∑
=
T
t t
t ij
ij x
x
T
V
P
1
γ
 lei. 
Calculating pension in this manner has a number of arguments: the whole interval of 
the employer’s activity is taken into consideration; the employer’s income, the annual 
medium income at the level of national economy; this way, the periods of economic crisis in 
the country, the inflation of said years does not influence the interests of the future 
pensioners; a certain social equity is established by attributing a single value to a pension 
point. On the other hand, the weak aspects of this system concern the       
β α γ ,..., 2 , 1 ; ,..., 2 , 1 , = = j i ij coefficients, which are constant in time. In our opinion, both 
the multiplying coefficients and the value of the points must evolve in time and be replaced 
by: 
() T t j i
t
ij ,..., 2 , 1 ; ,..., 2 , 1 ; ,..., 2 , 1 , = = = β α γ  
() T t V
t ,..., 2 , 1 , =  
The “Access” (A) and “Flexibility” (E) coefficients can and must be used by the 
authorities as “stimulant regulators” /fig. 1./. 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
PENSION 
E 
Pension System 
A 
Outcome 
+ 
Income 
 
Fig. 1.  The block-sketch A - E 
 
In their quality as “regulators” in the pension system, dubbed a regulated system, 
serve: the government authorities that establish the value  ( ) t V  of one pension point; the 
employer with vectors A and E. 
The pension rendered by value can be calculated using this formula: 
()
() ( )
t
t t
ij t
ij tgQ
T
V
P ⋅
⋅
=
γ
 
where the  angle constitutes the descent of the  t Q ( ) t t x f x =  function/fig. 2./. 
t
t
t P
x
x
=  - the points achieved by the employer in the year t.  t t t x P x ⋅ = . 
 
 
0 
t tx P  
t Q  
( ) t x f    
 
 
 
 
 
 
  t x   t x  
Fig. 2. The graphic interpretation of points in the year t 
 
The increase or decrease of the   angle depends on the employer’s efforts to earn 
more through work 
t Q
( t x ) Δ , on the government authorities that can, if the level of economic 
development permits it, to enhance the value of the pension point, on the efforts of the 
employer to take advantage of the A coefficient to increase the  angle by  , on the E  
coefficient for the increase of  , on the level of national economic development that can 
t Q () A
t Q Δ
() E
t Q Δincrease the  t x mean by t x Δ . The increase of the value of the pension point is a consequence 
of the increase of the GDP, and also of the increase of  t x . Therefore, the level of the pension 
can increase, remain constant or even decrease.  /fig. 3/. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
+
 
PENSION  
+
+
+ 
+ 
+ 
+ 
+ 
+ 
  t x Δ
  ( ) E
t Q Δ
  ( ) A
t Q Δ
  t x Δ
( ) t V Δ  
Pension 
System 
Income 
Fig. 3.  The “PENSION” regulating system 
 
 
Resources  
 
1. The European Institute of Romania, The Romanian pension insurance system   
during transition : major problems and solutions, Bucharest, 2004 (Institutul European din 
România, Sistemul de asigurări de pensii în România în perioada de tranziţie: probleme 
majore şi soluţii, Bucureşti, 2004.) 
 
 
 
 

O tratare complexa a sistemului de pensii din Romania

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics