How does the 2025 budget change for pensioners? - From indexing to the year-end bonus. The growth figure is expected in the spring
Social security expenses for the year 2025 will be in the amount of 197.7 billion ALL, of which the indexation of pensions and the contingency for the year-end bonus are foreseen. Referring to the budget for the next year, the Pension Indexation policy amounts to 1,618 billion ALL and the year-end bonus 3,750 billion ALL.
Expenditures for social security in 2025 are projected to increase against GDP, on average, by 7.7%. As for the remuneration for the 2025 year-end holidays, the budget envisages following the same scheme as currently. So, 15,000 ALL for pensions up to 20,000 ALL per month and 10,000 ALL for pensions over 20,000 ALL per month.
But another bonus, the amount of which is not included in the 2025 budget, is expected to be distributed in early spring. A few days ago, Prime Minister Edi Rama declared that for this purpose, in the first days of December, the second bonus fund will be created at the Bank of Albania. According to him, this bonus will be given at the beginning of each spring by allocating to all pensioners an amount obtained from the growth of the state's economy in the previous year.
But how has the progress of social security contributions been since the 2014 reform until today?
Referring to the official documents, the economic growth, the development of the labor market, as well as the fight against informality have made it possible for the contributory income in 10 years to increase by more than 2.5 times from 2013, from 51.3 billion ALL to 124 billion ALL in the year 2023 and 132 billion ALL at the end of 2024. In relation to GDP, contributory income has increased by 3.81% to 5.39%.
The expenses of the scheme have also increased from ALL 95.6 billion to ALL 170.2 billion, or ALL 75 billion more, which have been transferred to the family budgets of citizens. In relation to GDP, these expenses have increased from 7.08% to 7.38% or 0.3% of GDP.
Meanwhile, the deficit of the pension scheme, from 1.93% of GDP in 2013, has decreased to 0.85% of GDP in 2023, or in absolute value from 27 billion ALL to 18 billion ALL, increasing the financial sustainability of the scheme and the guarantee for the payment of pensions in the long-term future. On the other hand, the amount spent from the state budget for various compensations for citizens or special treatments has increased from ALL 21 billion to ALL 27 billion, increasing the income of the third age.
The current contributor-to-pensioner ratio is 1.19 contributors per pensioner, but projections show that this ratio will drop to 0.77 by 2080, if nothing changes.
However, it is expected that the new pension reform will be introduced soon. For months, with the assistance of the World Bank, the Government has been working on the design of a new scheme, which will amortize the problems that have appeared over the past 10 years, while at the same time enabling dignified pensions for the elderly, who are currently in the scheme , but also those who come out recently. The new reform aims to address demographic changes such as the aging of the population, the low birth rate and the rate of emigration of working-age individuals.
It is expected that with the new scheme there will be no more pensions below the limit. or the threshold of 150 euros. Currently, there are about 140,000 elderly people, mainly in rural areas, who have a pension amount of less than 150 euros per month, and who will be affected by these changes.
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