The pension budget for the Defense Ministry will go up by 9% in 2012 compared with 2011 and reach RON2.47 billion, the Interior Ministry’s budget will increase 5% to RON1.62 billion and the Romanian Intelligence Service will get 6% more money for a total of RON327 million. The budget of the National Pension and Social Security House will get a mere 0.05% more.
Therefore the government undertakes to spend RON4.41 billion on the pensions of the 159,000 former employees of the Interior and Defense Ministries and of the Romanian Intelligence Service, as shown in the 2012 budget, who will get RON2.289 on average per month.
This is the first time the special pension allocations are clearly marked in the budget draft. The ‘regular’ average pension, collected by the 4.76 million retired people, is set at RON747 for 2012.
Data for 2010 that ZF got from ministries show the government to have spent RON3.6 billion paying about 156,000 special pensions, and the average net pension stood at RON1,946. This means that compared with 2010, the year before the pension reform, and 2012, special pension expenses have gone up by RON800 million.
As a result, the highly praised pension reform, intended to bring down the deficit, appears to have a created an even more serious one.
“The pension reform was meant to include retirees formerly employed by the military, the police and the SRI in the public pension system. The recalculation of the special pensions led to approximately 80% of the retired people not getting pension cuts but hikes, because their income had been high when they were still working,” said Mihai Seitan, former labor minister and one of the originators of the pension reform. “It was only natural that the pension budget should increase, of course, but not by this much [21% for special pensions], because I don’t see how [it could afford to].”
Special pension expenses have increased by EUR180 million over the last two years, while the pension fund deficit reached over EUR3.6 billion. The government saved some EUR10 million by recalculating downwards the pensions of other people getting special benefits such as former diplomats, members of the parliament, employees of the Court of Accounts, the civil aerospace sector and the Justice Ministry.
Ziarul Financiar wrote as early as 2007 that there were only 150,000 to 160,000 retirees collecting special pensions (that is less than 4% of the total number of 4.7 million), which cost one billion euros a year, that is 10% of the total pension budget. The average pension of a former Interior or Defense Ministry employee is three times the amount that any other retiree category gets.
The main beneficiaries of the special pensions are former employees of the Interior and Defense Ministries, as well as those who worked for such services as the Romanian Intelligence Service, the Foreign Intelligence Service (SIE) and the Protection and Guard Service (SPP). The employees of such institutions had never contributed towards their government provided retirement pay (until this year), nor got their pension from the public pension budget but from allocations from the state budget to the respective ministries.
“There are no data about the retirees collecting special pensions so far because they were never part of the public pension system. While I was in office running the Pension House I did not know how many retired people came from the military or how high their pensions were. The retired military people’s pensions will continue to be managed by the specialized departments of the ministries,” Seitan added.
(English version by Loredana Fratila-Cristescu)