Social security contributions increase

TIRANA, Aug. 16 – The government’s recent decision to increase the minimum wage to 20,000 lek per month has also increased the minimum employers and employees will pay for social security and health insurance contributions.
Under the government decision, starting from July 2011 the minimum monthly wage to calculate social security contributions increases to 17,540 lek, from 16,820 lek. The maximum monthly wage to calculate contributions also rises to 87,700 lek, from 84,100 lek.
As a result, the minimum pension contributions increase to 4,894 lek per month, from 4,693 lek.
The biggest increase was made for self-employed people in the agricultural sector who will have to pay 21,600 lek annually, some 25 percent more than they did.
These increased obligations for social security contributions are aimed to bring more money to the fund that the government collects each year and deposits in the pensions fund.
That fund is hardly enough to cover the current pension scheme which the government has to fund through its own budget. Also, because the government has increased the minimum wage
levels, which serve in the calculations for monthly social insurance withholding, the change in the contribution was mandatory.
Social security contributions currently stand at 24.5 percent, of which 15 percent is paid by employers and 9.5 percent by employees. Meanwhile, health insurance contributions are at 3.4 percent, shared by 1.7 percent between employers and employees.