New pension scheme and benefit formula - Experts: The best reform. Welfare and reduced deficit
Next week, possible options for reforming the pension scheme are expected to be presented at the international conference "Reforming the Pension System in Albania".
The increase in the number of the population of retirement age in relation to the number of contributors to the scheme has led the government to review the insurance scheme, where the pension is directly linked to the amount of contributions. The innovations of the scheme relate to the minimum seniority to benefit from an old-age pension or social pension, the level of contribution given, and most importantly, the change in the entire benefit formula.
In its latest report, the IMF projects that contributions are expected to grow along with GDP per worker. The incentives are based on a simple set of assumptions related to each reform measure, including wage reform as well as the impact of emigration on the potential number of beneficiaries. Pension expert Ramadan Kondi said on the GDP show on SCAN TV that combined schemes should be used.
"Combined schemes are better, even defining the age at which it should start, but introducing a contribution per contributor scheme is an unaffordable burden. The state budget may not participate directly in the scheme, but by using indirect reforms," says expert Kondi.
The new scheme, which is being undertaken jointly with the World Bank, aims to narrow the gap between the minimum and maximum pensions. Official data from the Social Security Institute shows that last year, 51% of pensioners received a partial pension.
Economic expert Romina Radonshiqi, on the GDP show, said that this reform consists of developing the principle of insufficiency, ensuring higher benefits for pensions from the mandatory scheme as well as for the most vulnerable categories of society, such as disability or family pensions.
"We are looking at an approach where international consultancy is being provided to see what the best solution is. I think this reform will have a more positive impact than past reforms, it will be more sustainable in solving the problems with the deficit of the scheme, but also for the level of pensions in the Republic of Albania, affecting welfare, " says expert and pedagogue Radonshiqi.
Currently, the scheme is in deficit, as contributions do not cover the value of pensions, which is why the state budget pays around 500 million euros each year to finance this scheme.
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