Romania to cut extra pensions, student travel to balance budget

Romania will cut privileged pensions and free student travel in an attempt to reign in its budget deficit, Finance Minister Eugen Teodorovici announced on Monday.

Earlier this month President Klaus Iohannis signed the new pension law, providing a three-step phased pension increase between this September and 2021, which financial analysts said will result in huge holes in the budget. According to their calculations, the pension increases will mean an additional budget expense of RON 8.4 billion this year, 24.8 next year and 58.1 billion (EUR 12.3 billion) in 2021.

To keep the budget within the government’s target of 2.76 percent of GDP this year, the executive committee of the largest coalition party Social Democrats (PSD) decided to cap privileged pensions.

These pensions apply to former soldiers, law enforcement, secret services, members of parliament, judges and pilots and average RON 18,180 (EUR 3,842) compared with the national pension average of RON 1,227 (EUR 259). The privileged pensions will be capped at RON 10,000, with the rest going into a so-called “solidarity tax”.

The government also plans to restrict free train travel for higher education students. This was introduced in 2017 by the current government with an age limit of 26 years, but later the age limit was abolished for being unconstitutional.

Now the senior coalition party plans to re-introduce the age limit and restrict free travel to students who have passed their exams.

Title image: Romanian Finance Minister Eugen Teodorovici

Author: Dénes Albert