PM blames opposition on failure to approve pension reform

TIRANA, Oct. 31 – Prime Minister Sali Berisha has blamed the opposition Socialist Party for failure to approve the country’s pension reform. Speaking at a conference on the independence of regulatory entities, the Prime Minister accused the opposition of keeping the pension reform blocked for 2 to 3 years. “The pension fund market remains problematic because of lawmaker. The pension reform has been prepared and we remain open. We have the law and all decisions on the functioning of the market but there is some hesitation which is overcome in a series of stimuli and practices. The pension reform has been on the table for 2 to 3 years, and this because the opposition refuses it although it has accepted to vote the text. This is a reform that must be in force for many decades and its unilateral adoption creates unnecessary uncertainties and that why we are committed to negotiate with patience and make constructive dialogue with the opposition,” said Berisha.
Speaking of regulatory entities Berisha said their consolidation on strong legal basis is the safest way to guarantee freedom in the market and protect the interests of Albanian consumers.
Finance Minister Ridvan Bode has earlier said government was preparing a new formula on the collection of social security contributions and their allocation through pensions.
He said the new formula had been compiled under World Bank assistance but would be announced in a quieter political situation. Without ruling out the possibility of increasing retirement age, Finance Minister Ridvan Bode has earlier considered the reform a necessity. “Several key measures related to the contribution rate, the number of participants in the scheme and the fight against informality need to be taken into consideration,” said Bode.
According to the World Bank, Albania’s 8.2 percent of the GDP expenditure on social protection is just below the 10 percent limit which risks investments in other key priority sectors such as education and health.
As the pension reform initiated back in 2002 concludes this year with the retirement age having gradually increased to 65 years for men and 60 for women, the number of new pensioners in Albania will double, having extra costs for government to cover the deficit in pension scheme. The pension scheme deficit continues widening as it rose to 30 billion lek in Jan-Sept. 2012 compared to 27 billion lek a year ago. The current ratio is 1.4 contributions to 1 pensioner at a time when a stable pension scheme requires at least 3 contributions for one pension.
Controls carried out by the High State Audit show that a considerable number of businesses pay social security and health insurance contributions for a single person. Social Insurance Institute data show Albania had 540,422 pensioners in 2009 around 6,000 more than in 2008.