The EU expansion process is a dynamic one which requires the candidate country to acknowledge the latest developments in communitarian social policy. The dominant economic aspects are currently reinforced by the social ones. Likewise, a consensus must exist regarding the implementation in Romania of the communitarian legislation in this vast domain, but also of the process of re-establishing the differences towards the SM as far as the Romanian social security system is concerned in retrieving them.social insurance , pensions, public social insurance system, social insurance pension

Stegaroiu, Valentin

English

Research Papers in Economics

THE ADJUSTMENT OF THE ROMANIAN PUBLIC PENSION PLAN IN THE 
CONTEXT OF EUROPEAN INTEGRATION 
 
University Lector PhD Valentin Stegăroiu 
Titu Maiorescu University, Bucharest 
Faculty of Economic Sciences, Tg-Jiu 
 
SUMMARY 
 
The EU expansion process is a dynamic one which requires the candidate country to acknowledge the latest 
developments in communitarian social policy. The dominant economic aspects are currently reinforced by the 
social ones. Likewise, a consensus must exist regarding the implementation in Romania of the communitarian 
legislation in this vast domain, but also of the process of re-establishing the differences towards the SM as far as 
the Romanian social security system is concerned in retrieving them.  
 
The EU membership status (MS) Romania has obtained since January 1
st 2007 is an unprecedented event in 
the country’s age old history, therefore implying special efforts in order to adjust the communitarian law to the 
national social insurance legislation. Since Romania became a member state, the country is obligated to apply 
the requirements of the communitarian regulations on coordination to the field of social security for migrant 
workers. The regulations entail that the social security services provided by the Romanian law can be exported 
and that the creation and coordination of said services must abide the principles of communitarian coordination.  
In order to align the Romanian pension legislation to the communitarian one, Law no. 19/2000 has been 
adopted, concerning the public pension system and other social insurance rights [4]. The law was put into effect 
on April 1
st 2001 and it introduces for the first time the possibility that other citizens of other states or stateless 
persons can become insured members of the public pension system during their residence in Romania, whilst 
having the obligation to contribute to the state social insurance budget in exchange for the social insurance 
services the law entails. 
The state social insurance pensions are defined as monetary rights given to employees and their descendants 
at the expiration of a determined period of activity and at the law determined age or in the case of total or partial 
loss of working ability [2, p.14]. This definition also describes the most important categories of pensions 
regulated by the state social insurance system: pension for work quantity and age limit; pension for invalidity; 
pension for descendants. 
The reformation of the public social insurance system has introduced the following principles [3, pp. 42-43]: 
pension singularity – a person can receive a sole full social insurance pension; pension indexation and 
compensation – a mechanism legislated after 1990 through government decisions that modified pensions through 
contractual augmentations  or gradual/uniform percentages; tax-free pensions – like any other social insurance 
rights, pensions are tax free according to current regulations; imprescriptible rights to pension – which derives 
from the category of imprescriptible rights; surrender-free pensions – the right to pension cannot be surrendered.   
As “regulators” in the pension system – a regulated system, act the following: the government authorities that 
set the value   of a pension point; the insured with the A and E vectors. The coefficients “Access” (A) and 
“Elasticity” (E) can and must be used by the authorities as “stimulant regulators”.  
() t V
The value-oriented pension can be calculated using the following formula: 
()
() ()
t
t t
ij t
ij tgQ
T
V
P ⋅
⋅
=
γ
  (1) 
where the angle Q can function as the incline of the function  ( ) t t x f x = . 
t
t
t P
x
x
=  - the points made by the insurer in the year t  (2) 
t t t x P x ⋅ =   (3) 
The increase or decrease of the    angle depends on the efforts of the insured to win more through work 
, on the government authorities that can, if the level if economic growth allows it, augment the value of 
the pension point, on the effort of the insured to benefit from the A coefficient in order to increase the   angle 
by  , on the E coefficient to increase 
t Q
( t x Δ )
t Q
() A
t Q Δ ( ) E
t Q Δ ,  on the level of national economic development through which the average  t x  can increase 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 the  t x  average. 
The public social expenses are directed to the moral and material social aid: for children with outstanding 
intellectual abilities, but who come from low-income families( ) 1 n ; for children with mental or physical 
deficiencies, who require special medical care and treatments etc ( ) 2 n ; for pensioners accordind to current 
legislation  ; for the population still fit for work age-wise that have mental or physical deficiencies  () 3 n ( ) 4 n ; 
for the population still fit for work age-wise, that wants to work, but are unemployed  ( ) 5 n . In total, the number 
of the human population that requires social aid through social insurance is: 
∑
=
=
5
1 i
i n n  (4) 
The demographic indicators can be interpreted schematically. In the economical analysis per capital [1, p. 
128], and also in the problems with public social insurance, the necessity to examine said indicators arises. The 
multitude of the indicators is represented in a matrix. Line 1 is for the contribution of each of the demographic 
segments considered for the totality of the human population; line 6 – the number of the country’s population to 
one worker….; the number of unemployed individuals to one active worker in the national economy.  
The level of the public social insurance is determined by the level of the economic development and the total 
GDP. If the GDP is Y , the total GDP destined to social insurance is Y , then the contribution of the public 
social expenses will be: 
η =
Y
Y
  (5) 
The value of  Y  is determined by the government authorities, depending on: the politicians’ social policy, 
the level of the GDP; the structure of the expenses for public social insurance; the number of the population that 
benefits from public social insurance; the demographic policy; the economic policy; the economic-social policies 
of the EU member states 
The average specific public social insurance for one beneficiary represent: 
y
n
Y
i
i
=
∑
=
5
1
  (6) 
work efficiency  -  y
N
Y
=
5
;   (7)      
one worker requires:  γ =
∑
=
5
5
1
N
n
i
i
  (8) 
public social insurance beneficiaries. 
From every work unit, one part is destined to the public social insurance beneficiaries: 
 
∑ ∑
= =
⋅ = =
5
1
5
5
5
1
:
i
i
i
i n
N
Y
Y
N
Y
n
Y
y
y
  (9)          
 
 
 
The 
contribution 
of the total 
GDP destined 
for the public 
social 
insurance 
 
The number 
of workers 
to one social 
insurance 
beneficiary 
 
 
 
 
 Or, from 
5
5
1
N
n
i
i ∑
= = γ  we deduce 
γ
∑
= =
5
1
5
i
i n
N  and obtain: 
Y
Y
n
n
Y
Y
y
y
i
i
i
i
⋅ = ⎟
⎠
⎞
⎜
⎝
⎛
⋅ = ∑
∑
=
=
γ γ
1
:
5
1
5
1    (10) 
  γ =
∑
=
5
5
1
N
n
i
i
 is transcribed as 
γ
1
5
1
5 =
∑
= i
i n
N
 -  the number of workers to one public social insurance 
beneficiary  ⎟ ⎟
⎠
⎞
⎜ ⎜
⎝
⎛
= m
γ
1
. 
Therefore, 
Y
Y
m
y
y
=  which leads to 
Y
Y
my y = .  (11) 
The totality of public social insurance ( ) y  is directly dependant on the number of workers for one public 
social insurance beneficiary, onwork efficiency and on the contribution  ⎟ ⎟
⎠
⎞
⎜ ⎜
⎝
⎛
Y
Y
 of the GDP destined to the 
beneficiaries of the totality of the GDP.  
Taking into consideration its economic and social problems, Romania must elaborate pension schemes. As a 
model for such an endeavor Swedish, English, Belgian or Austrian schemes can be of use. The current retirement 
system in our country is not adequate to the economic and social problems. According to calculations, 27% of 
the active workforce has emigrated. The means to determine pension in Romania does not always reflect the 
contribution of the solicitant in his/hers active period. The pension id determined with the formula:  
⎟
⎠
⎞
⎜
⎝
⎛
= ∑
=
T
t t
t ij
ij
X
X
T
V
P
1
γ
  (12) 
In the national economy the wages for a category of specialists grow under the impact of outside factors (e.g. 
workers from the banking system and service providers etc.). In this case, the totality of the proportion:
t
t
X
X
 is 
reduced: some specialist in the economy will be unjustly disfavored when they will apply for pension (due to the 
increase in value of the  X  average). 
Another aspect concernes the fact that a specialist is formed during 2/3 of his active life and only 1/3 of it is 
used for creative purposes. This would require a reformation of the active period of work, as it is this author’s 
opinion that the age limit should be flexible. To my mind, every person should benefit from pension at any age, 
the pension being calculated in dependence with the active period and with his/hers paid contribution. This 
method of retirement is show in the graphic (fig 1).  
 
CONCLUZION 
 
In conclusion, the pension system in Romania can be adapted to that of the other EU member states 
following these principles: the complete process of contribution for solicitants to pension in Romania = 
; the contribution from the minimum necessary stage of contribution that upholds the pension 
calculation for the solicitants to pension in Romania =
{ 2 27 1
max S S
T
≤ ≤ }
{ } 3 27 1min S S T
≤ ≤
; the age limits for solicitants to pension in 
Romania = ; the minimum periods of employment in Romania for the citizens of other states = 
; the minimum periods of residence in Romania = 
{ 4 27 1
max S S
T
≤ ≤ }
} { 5 27 1
max S S
T
≤ ≤ { } 6 27 1
max S S
T
≤ ≤
; the minimum periods of undertaking economic activities in Romania =  ; the maximum periods of migration for other citizens with 
economic activities in Romania =  .  
{} 7 27 1
max S S
T
≤ ≤
{} 8 27 1min S S T
≤ ≤
In this manner, Romania does not create retirement situations which are incompatible with other EU systems, 
but lessens the “burden” for immigrant pensions services. Moreover, regulations can be enforced so that 
acquiring or calculating services can be conditioned by accumulating periods of insurance, employment and 
residence that are within the regulations of the country’s legislation. Therefore, the migrant worker may not be 
entitled to services or may receive a lesser service than that in his country of origin.   
 
 
 
Bibliography: 
 
1. Auer, P., Changing labor markets in Europe. The role of institutions and policies, ILO, Geneva, 2001 
2. Barr, N. (editor), Labor markets and social Policy în Central and Eastern Europe. The Accession and 
Beyond, Oxford University Press, 2005 
3. Bistriceanu, D. Gh., Sistemul asigurărilor din România (The Romanian Insurance System), Editura 
Economică, Bucureşti, 2002 
4. Legea nr. 19 din 17 martie 2000 privind sistemul public de pensii şi alte drepturi de asigurări sociale, 
publicată în Monitorul Oficial al României, Partea I, nr. 140 din 1 aprilie 2000. (Law no. 19/ 17.03.2000 
concerning the public pension system and other social insurance rights, published in the Official Monitor of 
Romania, Part I, no. 140/ 1.04.2000 ) 
 

19 din 17 martie 2000 privind sistemul public de pensii şi alte drepturi de asigurări sociale, publicată în Monitorul Oficial al României, Partea I, nr.

The Adjustment of the Romanian Public Pension Plan in the Context of European Integration

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