Statutory Old Age Pension Scheme
Sistemul unitar de pensii publice
Coverage
Mandatory insurance
- Employees.
- Specific groups of economically active persons, such as civil servants; individuals working in elective functions or appointed within the executive, legislative or judicial authority during their term of office; cooperative members of a craft cooperation organisation; self-employed persons; individuals that have the obligation to pay social security contributions on their income, incl. from intellectual property rights.
- Specific groups of economically inactive persons, such as parents during child-raising periods and home caregivers; claimants of income replacement benefits incl. recipients of sickness and disability benefits, unemployment benefits; university students who have attended and graduated with diploma from day courses during the regular university period; persons in military service or mobilisation periods.
Voluntary insurance
- Lawyers.
- Any person who is not compulsorily insured can join the scheme on a voluntary basis by concluding a social security contract with the Territorial Houses of Pensions (in case of termination of the social security contract, the paid social security contributions are not refunded and the completed contribution period is used in determining the pension entitlement).
Financing
General finances
- Mainly PAYG-financed from insurance contributions.
- Partly tax-financed out of the general budget.
Contribution rates
- For persons only enrolled in the statutory old age pension scheme: fixed share of monthly gross earnings (25%) with contribution assessment ceiling.
- For persons also enrolled in the private pension scheme: fixed share of monthly gross earnings (21.25%) with contribution assessment ceiling.
- Contributions are entirely paid by the employee.
- Hazardous and burdensome work: additional fixed share of monthly gross earnings (4% or 8%) entirely covered by the employer.
Taxation of contribution payments
- The contributions are not subject to taxation.
Administration
- The National House of Pensions manages the scheme and pays the benefits, through the Territorial Houses of Pensions, directly to the eligible person.
Qualifying Conditions
Qualifying conditions
- Standard old age pension: statutory retirement age is 65 for men and 63 for women; minimum insurance period: 15 years (full pension insurance period: 35 years); achieving the full pension insurance period prior to the statutory retirement age can lead to earlier entitlement to retirement.
- Special conditions apply to miners (retirement age 20 years lower than the statutory retirement age with lowest possible age: 45 years of age, minimum insurance period: 20 years), individuals exposed to radiation (minimum insurance period of 15 years for continuous radiation area exposure and 17 years for discontinuous radiation area exposure), blind persons (minimum insurance period of 1/3 of the full insurance period for working blind persons, without a specified retirement age).
Early retirement
- Available at the latest 5 years before the statutory retirement age without adjustments to pension benefits, with cumulated minimum insurance period: at least 8 years more than the full pension insurance period of the standard pension (at the date of fulfilling the standard old age pension conditions, the early retirement pension is converted to old age pension and recalculated).
- Partial early retirement: available at the latest 5 years before the statutory retirement age in case of acquiring the full pension insurance period or in case of exceeding the full pension insurance period with up to 8 years.
- Work in burdensome conditions: special early retirement regulations apply to individuals who have acquired the full insurance periods.
Deferred retirement
- Retirement can be deferred with indirect adjustments to pension benefits due to the increase in the annual scores and the average annual score.
- Contributing to the scheme after reaching the standard retirement age and the minimum contribution period leads to an additional increase in pension benefits (0.5% per deferred month); the given increase does not apply for claimed pension benefits.
Combining employment & retirement
- Termination of employment is not a precondition for claiming pension benefits.
- After reaching statutory retirement age employment is permitted without earnings limit.
Benefits
Pension benefits
- Primarily based on the amount of contributory earnings throughout working career, including pension-credited periods of e.g. child-raising.
- No specification in law regarding fixed minimum and maximum amount of pension benefits.
Factors for benefit calculation
- Based on the following factors: the monthly score, the annual score, the average annual score and the pension points.
- Monthly score: calculated on the basis of reported individual monthly earnings subject to social security contributions divided by the average gross earnings for that month, as reported by the National Statistical Institute.
- Annual score: determined by dividing the sum of the monthly scores achieved in the given calendar year by 12.
- Average annual score: determined by dividing the number of points resulting from the sum of the annual scores by the number of years corresponding to the full pension insurance period.
- Pension point: starting 01/09/2020, the amount of one pension point is RON 1,442 (in 2021).
- The amount of the benefit equals the sum of the multiplication of the pension point and the average score.
- Adjustments: indirect adjustment through determing the value of the pension point annually.
- Partial early retirement: based on the amount of the standard old age pension reduced by the number of years exceeding the full insurance period and the number of months missing in order to reach the standard retirement age.
Taxation and social security contributions
- Taxable pension income is subject to 10% income tax (the taxable pension income is determined by deducting the monthly non-taxable amount of RON 2,000 from the pension income).
- Pension benefits are not subject to social security contributions.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Mandatory insurance
- Employees.
- Specific groups of economically active persons, such as civil servants; individuals working in elective functions or appointed within the executive, legislative or judicial authority during their term of office; cooperative members of a craft cooperation organisation; self-employed persons; individuals that have the obligation to pay social security contributions on their income, incl. from intellectual property rights.
- Specific groups of economically inactive persons, such as parents during child-raising periods and home caregivers; claimants of income replacement benefits incl. recipients of sickness and disability benefits, unemployment benefits; university students who have attended and graduated with diploma from day courses during the regular university period; persons in military service or mobilisation periods.
Voluntary insurance
- Lawyers.
- Any person who is not compulsorily insured can join the scheme on a voluntary basis by concluding a social security contract with the Territorial Houses of Pensions (in case of termination of the social security contract, the paid social security contributions are not refunded and the completed contribution period is used in determining the pension entitlement).
General finances
- Mainly PAYG-financed from insurance contributions.
- Partly tax-financed out of the general budget.
Contribution rates
- For persons only enrolled in the statutory old age pension scheme: fixed share of monthly gross earnings (25%) with contribution assessment ceiling.
- For persons also enrolled in the private pension scheme: fixed share of monthly gross earnings (21.25%) with contribution assessment ceiling.
- Contributions are entirely paid by the employee.
- Hazardous and burdensome work: additional fixed share of monthly gross earnings (4% or 8%) entirely covered by the employer.
Taxation of contribution payments
- The contributions are not subject to taxation.
- The National House of Pensions manages the scheme and pays the benefits, through the Territorial Houses of Pensions, directly to the eligible person.
Qualifying conditions
- Standard old age pension: statutory retirement age is 65 for men and 63 for women; minimum insurance period: 15 years (full pension insurance period: 35 years); achieving the full pension insurance period prior to the statutory retirement age can lead to earlier entitlement to retirement.
- Special conditions apply to miners (retirement age 20 years lower than the statutory retirement age with lowest possible age: 45 years of age, minimum insurance period: 20 years), individuals exposed to radiation (minimum insurance period of 15 years for continuous radiation area exposure and 17 years for discontinuous radiation area exposure), blind persons (minimum insurance period of 1/3 of the full insurance period for working blind persons, without a specified retirement age).
Early retirement
- Available at the latest 5 years before the statutory retirement age without adjustments to pension benefits, with cumulated minimum insurance period: at least 8 years more than the full pension insurance period of the standard pension (at the date of fulfilling the standard old age pension conditions, the early retirement pension is converted to old age pension and recalculated).
- Partial early retirement: available at the latest 5 years before the statutory retirement age in case of acquiring the full pension insurance period or in case of exceeding the full pension insurance period with up to 8 years.
- Work in burdensome conditions: special early retirement regulations apply to individuals who have acquired the full insurance periods.
Deferred retirement
- Retirement can be deferred with indirect adjustments to pension benefits due to the increase in the annual scores and the average annual score.
- Contributing to the scheme after reaching the standard retirement age and the minimum contribution period leads to an additional increase in pension benefits (0.5% per deferred month); the given increase does not apply for claimed pension benefits.
Combining employment & retirement
- Termination of employment is not a precondition for claiming pension benefits.
- After reaching statutory retirement age employment is permitted without earnings limit.
Pension benefits
- Primarily based on the amount of contributory earnings throughout working career, including pension-credited periods of e.g. child-raising.
- No specification in law regarding fixed minimum and maximum amount of pension benefits.
Factors for benefit calculation
- Based on the following factors: the monthly score, the annual score, the average annual score and the pension points.
- Monthly score: calculated on the basis of reported individual monthly earnings subject to social security contributions divided by the average gross earnings for that month, as reported by the National Statistical Institute.
- Annual score: determined by dividing the sum of the monthly scores achieved in the given calendar year by 12.
- Average annual score: determined by dividing the number of points resulting from the sum of the annual scores by the number of years corresponding to the full pension insurance period.
- Pension point: starting 01/09/2020, the amount of one pension point is RON 1,442 (in 2021).
- The amount of the benefit equals the sum of the multiplication of the pension point and the average score.
- Adjustments: indirect adjustment through determing the value of the pension point annually.
- Partial early retirement: based on the amount of the standard old age pension reduced by the number of years exceeding the full insurance period and the number of months missing in order to reach the standard retirement age.
Taxation and social security contributions
- Taxable pension income is subject to 10% income tax (the taxable pension income is determined by deducting the monthly non-taxable amount of RON 2,000 from the pension income).
- Pension benefits are not subject to social security contributions.
Legal Basis: Law No. 263/2010 regarding the public pension system (Legea nr. 263/2010 privind sistemul unitar de pensii publice); Law No. 227/2015 regarding the Fiscal Code (Legea nr. 227/2015 privind Codul fiscal); Rules of Application of the Provisions of Law No. 263/2010 on the unitary public pension system of 20/03/2011 (Norma de aplicare a prevederilor Legii nr. 263/2010 privind sistemul unitar de pensii publice din 20.03.2011).