BREAKING Special pension reform enters the government approval circuit on Tuesday and will be adopted next week as draft law / Bill will be sent to Parliament for debate / Military pensions remain unchanged

A bill drafted by the Ministry of Labour and aimed at reforming special and service pensions will enter the approval circuit between ministries on Tuesday, 20 December and should be adopted by the government next week, government sources told G4Media. After adoption in the government, the bill will be sent to parliament for debate and will most likely be adopted in the session starting in February 2023.

The bill provides for a reform of special pensions based on World Bank recommendations, which Economedia.ro exclusively reported on back in October.

A political agreement in the PSD-PNL-UDMR coalition for the final version of the draft reform assumed by the PNRR would have been reached in the last days, after political negotiations.

Even though this reform should have been completed by 31 December 2022, the government would have obtained the European Commission’s agreement to a postponement, but not beyond the payment deadline for the new tranche of the NRRP money, according to G4Media sources.

The changes to the current legislation will apply to six main categories of special pensioners: magistrates, diplomats, parliamentary officials, civil aviation personnel, court support staff and Court of Auditors employees.

Thus, in line with World Bank recommendations, the reform proposals are aimed at the following changes:

– The retirement age to gradually rise to 65. The retirement age would increase by 6 months/year for ten years to reach the 65 years required by the World Bank.

– The length of service required for retirement should be at least 30 years

– The pension would be calculated as 65% of the average gross earnings over 5 consecutive years, at the choice of the last 10 years of service

– 65% of average earnings to be gradually increased from the current 80% over ten years

As a reminder, for judges and prosecutors, the World Bank has recommended revising the right to retire at any age with 25 or more years of professional service. The 25-year requirement should be gradually increased to 30 years and a minimum retirement age requirement should be introduced. This age should be gradually increased to 60 or 65, the international institution adds.

In addition, the initial net pension cannot exceed 100% of the person’s net salary in the year of retirement.

These changes will not apply to military pensions (police, military, secret service), as the World Bank has recommended that they should not be changed in light of the war in Ukraine.

The reform of special pensions is a milestone undertaken by Romania as part of the Recovery and Resilience Plan (PNRR) and must be adopted by the end of this year. The World Bank is the consultant in charge of proposing reforms. If Romania fails to meet this milestone, it risks losing the next tranche of the NRRP.

It is worth noting that so far the PSD-PNL-UDMR governing coalition has not taken any political decision on the reform of special pensions. A draft law leaked to the press and denied by the Ministry of Labour and the Ministry of Justice has led to a wave of retirements among magistrates.