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News 05 Jan 15

Albania Launches New Pensions for Poorest

The new social insurance scheme will give payments of 50 euro per month to people older than 70 who have not made any pension contributions.

Gjergj Erebara
BIRN
Tirana

 

 
 

In this photo from 24 September 2014, a poor elderly couple of is seen carrying their belongings in the streets of Tirana, Albania. Albania has introduced a social pension scheme for poor Albanians who lived outside the state insurance scheme during the last 25 years. Photo: LSA / FRANC ZHURDA

Almost 5,000 Albanians are expected to benefit from the new law on social insurance contributions that entered into force on January 1.  

“All those who do not fulfil the necessary conditions for a pension can claim a social pension if they are older than 70 and have lived in Albania for the last five years,” says the law.  

The number of beneficiaries is expected to increase to 30,000 in 2040 and about 125,000 in 2080.

Since the fall of communism, a large number of Albanians have remained outside the public pension scheme. Some of them worked abroad, others were self-employed in agriculture and did not pay contributions.

Albania is facing a social security crisis due to the ageing of its population and the insufficient number of contributors. The pension scheme deficit represents about 2.5 per cent of the country’s GDP.

The new law increased the amount that workers must pay in contributions from and reduced benefits to pensioners in order to gradually ease the burden of the deficit on the state budget.

The law envisages a gradual increase in the retirement age. Currently Albanians are entitled to pensions if they have contributed for 35 years and are older than 65 if they are male and 60 if female. The new legislation increases the retirement age by two months a year for the next few decades until it reaches 67 years old for both sexes.

There are currently about 1.8 million Albanians of working age but only 500,000 are paying regular social insurance contributions.

About 500,000 Albanians are classified as ‘self-employed in agriculture’, but most of them do not pay social contributions.

If they are older than 70, they can now apply for social pensions, and will receive 6,650 lek per month (50 euro).

The social pension is intended to increase at about two per cent per year over the next few decades.

 

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