The EU Countries Pension Systems Are In Jeopardy

The European Commission last week published a report on the status of the pension systems in the member-states, warning on the effects of the economic crisis.

With regard to Romania, the report says the country has to face similar problems with the other European countries, given the aging of the population. However, Romania's case is also special, as its population of retirees has grown with 80% between 1990 and 2003, due to early retirement laws passed in the transition period.

This resulted in having 0.79 active people, contributing to the pension system in 2003, to every retiree. Whereas in 1990 there were 3.43 active people to every retiree.

At the same time, the proportion of the pension fund to the GDP dropped from 7.2% to 6.5%, the report showed.

Also adding to the problem that only 41.4% of the workforce is active on the legitimate job market, with 20% to 50% - pending on the estimates - working in the gray economy. This means that the contributions to the pension system stay low.

The national estimates for the 2008 pension fund are to reach 7.3% of the GDP, which is under the EU average.

This is why the fight against the gray economy and the undeclared income should carry on, the report says.