Romania: New Law on the Romanian Public Pension System to Replace the existing one in 2021
Law No. 127/2019, which is set to replace the existing one on the public pension system in September 2021, was recently published in the Official Bulletin. Important changes within the public pension system will take place when the law enters into force. The law passed through Parliamentarian debate twice, after the first version was found to have constitutional issues, and might be subject to further changes before the enforcement takes effect.
The most important changes of the new law on the Romanian Public Pension System are the ones regarding the way the pensions are to be calculated. According to the new law, the algorithm that is used in order to determine the pension will be changed and all existing pensions will undergo a recalculation process. However, no existing pension will be lower after the recalculation and changes on the amounts are to be made only if they are more favourable to the beneficiaries.
According to the existing law, early retirement can be obtained in certain conditions both with and without penalties. After 2021, early retirement will be possible only with penalties and early retirement will only be possible for those beneficiaries who have attained the complete contribution period, or exceeded it by up to 8 years. While it is possible now to supplement the pension contribution by voluntarily paying the contribution for the last 5 years, the new law grants the possibility to supplement the pension contribution for any 5-year period.