ARHIVELE OLTENIEI - Universitatea din Craiova

Reforming Romanian Pension System: The Necessity of Supplementary Private Pensions 307accomplishments from accumulated pensions and the risk of inflation afterretirement are completely supported by the individual 7 .There is evidence that private sector provisions tend to favor higherincome groups. On the other hand, certain categories of contributors in thepublic sectors are disadvantaged (the one with higher income) and a lot of themwill not pay the contributions if the obligativity of contribution would not exist.Another category of persons who would not pay contributions voluntary are thevery poor which, because of the lack of resources, would use their incomes forthe purpose of satisfying their immediate needs, without making long termeconomies, in their old age remaining in the charge of social assistance 8 .Another disadvantage of public pensions system (PAYG) is the fact that it doesnot involve the right of property upon pension, participants’ survivors being ableto benefit only by conditioned and limited rights 9 . Thus, for reasons of social andpolitical acceptability, it may seem necessary to balance increases in privateprovisions by stronger redistributive features in the public scheme, for examplethrough a progressive benefit structure in earnings-related schemes or theintroduction of minimum provisions for all elderly.Public retirement schemes seem bound to play an important role in thefuture, although their future structure and the way in which they will combinewith non-public sector is as yet unclear.All the three pillars have the aim of facilitating income smoothingthroughout the life-circle and insuring against longevity: we all would like tokeep our standard of living after retirement. We do not know how long we willlive after retirement, thus our private savings arrangements might be not enoughwhen we live longer than expected. Disability and survivor’s pensions provideinsurance against incapability to earn income or against loss of the breadwinner.Ageing calls for a new approach in social policy for elderly: funding andprivatization do not solve the problem of the inter-generational national incomedistribution; there are necessary integrated actions aiming at increased retirementage, increased labor force participation and low unemployment rate.7 Nicholas Barr, Labor Force Markets and Social Policy in Central and Eastern Europe ,Oxford University Press, London, second volume, p. 242.8 Marian Preda, Romanian Social Policy between Poverty and Globalization , Iaşi,Polirom Publishing House, 2002, p. 82.9 Smaranda Dobrescu, Mihai •eitan, op. cit., p. 40.