Citation:
[Journal:] Financial Studies [ISSN:] 2066-6071 [Volume:] 23 [Issue:] 2 (84) [Publisher:] Romanian Academy, National Institute of Economic Research (INCE), "Victor Slăvescu" Centre for Financial and Monetary Research [Place:] Bucharest [Year:] 2019 [Pages:] 62-74
Publisher:
Romanian Academy, National Institute of Economic Research (INCE), "Victor Slăvescu" Centre for Financial and Monetary Research, Bucharest
Abstract:
The introduction of the correction index in the mechanism of determining pension benefits in Ro mania in 2013 has led to an inefficient formula which generates differences between the incomes received by pen sioners with the same level of contributions depending of the year of retirement. This paper reveals the mechanism through which these inefficien cies are generated, their consequences and analyzes the formula proposed by a new pension law against this issu e. We conclude that the new formula has the potential to solve this problem, but with a relevant budgetary cost and emphasize the challenge betwe en balancing the costs generated by the change of the formula and the objective of increasing the value of the pension point, while dealing with the sustainability of public finances.