Pension scheme crisis
16/11/2013 00:00
Albanian sign language branch is opened for the first time at the Faculty of Foreign Languages 05/10 21:12
The retirement insurance scheme has turned into a heavy burden for the
state budget. Official data say that the government will use more than
690 million USD from taxes to keep the pension scheme on its feet, and
also the health care.
This has overpassed 5.5% of the Gross Domestic Product, and it causes 80% of the total state deficit or the debt that the government takes. An alarming indicator, caused by several reasons.
The most important is the low number of those who pay insurance. According to the World Bank, only 1 in 5 Albanians in 2010 contributed to the pensions scheme. This is the most negative in Europe and Central Asia, making the scheme almost unstable.
The government says that the unemployment in Albania is 13%, but most of them who appear employed are not regular payers of contributors, such as farmers. Another reason is the high informality in the job market.
The insurance scheme has been deepening the debt for years. The government’s efforts to reform it have failed due to the lack of political consensus. But the public finances which are now in a crisis, make it indispensable.
A few weeks ago, the Minister of Finances insinuated that the pension age might increase, to make the scheme easier. But as numbers show, the real problem comes from the other side, from contributors.
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