How experts estimate when you come out to retire

The population of Europe is facing an increase in the aging process and Romania is no exception. Low birth is one of the factors that contribute to this situation, as well as to the increase in the quality of life, which leads to the increase in life expectancy.

It is estimated that the population greater than 65 will represent half of the population aged between 15 and 65 by 2060, according to a study by the European Commission.

This is negatively influencing several aspects concerning the economy of European countries, such as health and social services intended for the elderly population, but also on pensions in the state system.

There is no unique pension model in EU countries, but most of the countries of the Center and Union of Eastern Europe has adopted the system of 3 pillars: the pillar I which represents the pension guaranteed by the State, the pillar II which represents the compulsory private pension and the III pillar that represent the optional private pension.

This model has also been adopted in Romania, the pillar I, being based on the ELG funding system – solidarity between the generations. This means that those in the field of work today contribute from the gross salary with a percentage to the public pension fund, from which the pensions of those who withdraw today are paid.

And when those in today’s field of work will reach the retirement age, those in the field of work will actually pay their pension.

The risks of the public pension system based on solidarity between generations

The greatest risk of the pillar pension system I, as in Romania, is given by the fact that the state must guarantee the sustainability of public finances.

In particular, the increases in public pensions must be related to the growth of the state budget so that there is a balance between the funds used for the payment of pensions and funds used for the development of the country (such as investments in the infrastructures).

Another risk of the public pension system in Romania is the high number of those who withdraw in advance.

The European Commission has estimated in the study of the joint report on pensions: country profiles that by 2060 the population of over 65 years in Romania will increase by 40% compared to the active population. A simple example would be that 100 people active in the field of work will pay 2060 pensions of 140 pensioners in 2060.

What to expect the Romanians who will retire in 20-30 years

Although the estimates of the European Commission studies are discouraged, not only those who retire over 40 will be affected by the aging trends of the population in Romania.

Specialists such as Adrian Codîrlaashu, president of CFA Romania, warn that the effects of the aging of the population will feel even faster, even from 2030-2035.

The Romanians who will retire, then pass the active population in the field of work, if current trends are maintained. So the pillar pension will be too small to support a decent life, bringing much of the population to the limit of poverty.

How do you provide a decent life to retire?

The good news is that the second pension pillar does not depend on the pillar I and the money they accumulate there until your retirement age remains. But the percentage of the contribution to pillar II of the pension is reduced.

Therefore, specialists recommend saving and investing efficiently as they are active in the work field.

The simplest variant is to choose an optional private pension, which gives you the flexibility to pay a monthly or periodically, when when you retire you will enjoy a coherent bottom.