Employment guiding

Explaining the Romanian pension system – frequently asked questions

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Although it may seem like a topic for people over the age of 60 (or, in some cases, for people who are less than 60, but meet certain special conditions for retirement), the topic of pensions should be of interest to everyone. This is because, although you can benefit of pension only later in life, the contributions that guarantee your insurance in the Romanian public pension system must be paid much earlier – and, in most cases, the payment of these contributions is even mandatory.

In this article we explain how the Romanian pension system works and who can contribute and benefit from it.

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The simple answer here is that you become insured – mandatorily – when you start working, either for an employer, or on your own, as a freelancer. Basically, a part of your gross income must be paid to the Romanian state pension system, a contribution also known as the mandatory contribution to the social insurance fund (in Romanian: Contribuția de Asigurări Sociale, or simply CAS).

Currently, according to the provisions of the Romanian Tax Code, the pension contribution rate is 25% of the gross monthly salary, and is being withheld by your employer, if you generate income as an employee (this includes not only the salary, but also other income provided by the employer as appropriate, such as, for example, any monthly allowances). You also have an obligation to pay this contribution (in certain conditions) if you earn income independently, as a freelancer (self-employed individual).

There are also certain special situations for atypical working conditions, in which case, in addition to the above percentage due by the individual who earns the taxable income, the employer (we speak of these exceptions only in the case of employees) must pay an additional contribution, according to Law no. 263/2010 on the Romanian unitary public pension system.

We will not go into more detail here. For the moment it is enough to mention that these exceptions apply if we are talking about special or exceptional working conditions, where the additional share can reach a percentage of up to 8% of the gross income, considered as a basis for calculation.

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This answer can only be accessed by Premium account subscribers. To register for a Premium subscription, please check details here.

Although (part of) the logic of paying the pension contribution is to ensure a system based on the principle of social solidarity for currently retired persons (in other words, the money you pay now is used to pay the pensions of those currently benefitting of pension rights), the main reason you pay the pension contribution is that you can benefit later from pension payments.

But, to benefit of it, in addition to the standard retirement age, you must meet one criterion: to have contributed for a minimum period of 15 years in the Romanian public pension system. But it is important to remember that the full contribution period means 35 years for men, respectively 31 years and 7 months for women who retire between May and July 2021. If they retire between September and November 2021, the full contribution period for women go up to 31 years and 8 months.

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Theoretically, according to the provisions of Law no. 416/2001 on the guaranteed minimum income, with subsequent amendments and completions, families and single persons have the right to access a guaranteed minimum income as a form of social assistance from the Romanian state.

According to the same law, when establishing the right to benefit pf social assistance for a family or, as the case may be, for a single person, all the types of income that each member of the family derives must be taken into account. This includes any income generated from state social insurance rights, unemployment benefits, legal maintenance obligations, allowances, or other types of state aid.

More details on the form of social assistance to which you are entitled and the applicable conditions can be requested from any territorial General Directorate of Social Assistance and Child Protection.

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Tax & Legal consultant since 2005.

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