Fier: Pensioners of the District in Open Discussion on Pensions and Plans to Prevent Abuse and Theft

Open meetings with pensioners across Albania continued today in Fier, featuring an informative discussion on pension issues led by Prime Minister Edi Rama. Pensioners from the city and surrounding areas participated, many of whom have contributed significantly to sectors like oil extraction, processing, and agriculture.

"Our primary focus today is on wages, as the foundation of what affects pensions is contributions-real wages, fully declared wages, and the legal agreements between employees and employers, which should be without any informality," stated Blendi Gonxhja, Minister of Economy, Culture, and Innovation. He emphasized the importance of careful interventions in the pension system and their long-term impacts, noting, "Our responsibility today is significant; the decisions we make will affect future generations."

Belinda Balluku, Deputy Prime Minister and Minister of Infrastructure and Energy, highlighted specific developments in Fier, mentioning that "the status of oilmen has been established, which includes 6,000 supplementary pensions. Additionally, we have successfully implemented a retirement age of 60 for this demanding profession, which is five years earlier than the official retirement age.

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Prime Minister Edi Rama: Greetings to everyone, and thank you for being here today. We are committed to an open discussion throughout Albania, engaging with political leaders from the Socialist Party, cabinet members, and deputies to connect with as many pensioners as possible. Our goal is to clearly and factually present the current landscape, so we can understand not just what we want to achieve, but how we can do it.

First and foremost, I want to emphasize that pensions are undoubtedly the most challenging aspect of our development. The issue of pensions is not exclusive to countries like ours; it is a concern for all nations, including the wealthiest, where the challenge of increasing pensions and responding financially to these increases is ongoing. It's not something that can be addressed today and forgotten tomorrow. Every pension increase must be sustainable over time.

So, why is this the most difficult issue, and what distinguishes pensions from wages? Unlike wages, which are funded directly by the state budget, pensions rely on social insurance contributions. The pension fund's sustainability depends on the capacity of social insurance to meet the demands for pension payments.

Firstly, due to historical factors, we inherited an extremely challenging situation regarding pensions. There has been significant evasion of social insurance contributions, which complicates the landscape.

Secondly, in the early 1990s, when the country faced economic collapse, many workers were forced into early retirement from factories and enterprises. This led to a sharp, artificial increase in the number of pensioners at a time when the social insurance fund was incredibly weak.

Thirdly, during this historical period, many people emigrated. While they earned income abroad and paid social insurance there, they did not contribute here. This has created a heavy legacy. When we took office, we found only one pension agreement with another country-Turkey-where the number of emigrants is not particularly significant.

Today, we have successfully established agreements with over 20 countries, and the most significant is the one with Italy. This allows those who retire and have worked in these countries to benefit from the social insurance contributions made there. Thus, their pension is effectively the total of contributions made both here and abroad, resulting in a dignified pension for them.

Now, the final and equally challenging aspect is negotiating an agreement with Greece, which we are currently discussing with the Greek side. This will take time-not due to our efforts, but because it is a significant decision with important financial implications.

With Italy, we have finally reached an agreement that recognizes the hard work and contributions of many Albanians who have retired or will retire after working in the Italian economy.

Another crucial point is that, as I mentioned earlier, we continue to face a serious issue with the evasion of social insurance obligations by both employees and employers. This is the right moment for us to make a strong effort, as our current economic growth and increased opportunities enable us to come together and discuss concrete actions starting from the end of this year. Previously, we did not have this opportunity.

It is absolutely not true that we have neglected or forgotten about pensioners. In fact, the opposite is true.

As we speak, the government and the state budget cover nearly 500 million euros of the gap between social insurance contributions and pensions. This means that for every pension paid today, part of it comes directly from the government, not from social insurance. We are ready to not only maintain this support but to increase it. However, the challenge is to keep a healthy balance so that it does not hinder the state's ability to function effectively and does not obstruct development, which ultimately generates revenue and creates more opportunities.

Taxes are not meant solely for paying pensions, they are necessary for all the essential services the state provides and for financing development.

To put it simply, taxes are primarily for children. Social insurance is for pensioners. Taxes fund schools, nurseries, and kindergartens, they also cover healthcare, infrastructure, and a wide range of other services.

Taxes are what pay teachers, doctors, and police officers-all of whom serve the community, in contrast, social insurance is specifically designed to fund pensions those who evade these contributions effectively deprive pensioners of their right to a better pension.

We have a big plan to curb the theft of pensions by employers and even by employees who accept cash payments. This practice causes us double harm: first, we have the the employer who tells the employee, "Look, I can pay you 400 euros through the bank or 500 euros through the bank because up to 500 euros there's no profit tax. I'll give you 500 euros through the bank and another 200 in cash, so you have all of it for yourself without paying taxes for pensions or healthcare.

These are not just taxes; they are contributions that you make today to ensure a better pension tomorrow. As we speak, there are countless complaints each year at ISKSH because when people retire, they are shocked by the pension they receive. They say, "It can't be that low; my salary was higher." In reality, they had a higher salary by including cash payments, but those cash payments do not appear in the state's records. The state calculates pensions based on registered income, not what was received in cash.

By opting for cash payments, individuals create a trap for themselves when they retire. Furthermore, they harm other pensioners who should have received those funds each month, as the system relies on accurate contributions to function properly.

The 4.1% increase is not a pension raise; it's an indexation mandated by law. The law requires annual adjustments to account for rising prices, and this calculation is done regularly-neither out of goodwill nor indifference. Depending on various factors, it may result in 4.1%, 3.9%, or 5.2%. The government is obligated to implement this; it's not a discretionary increase, despite what some might say. We even made two adjustments within a year during the crisis caused by the war in Ukraine when prices surged. What we aim to achieve is something entirely different from this annual adjustment.

So, why is this the right moment? Because the economy has grown, allowing us to explore a new approach to pensions. If the opportunities hadn't increased to the point where we could start this new strategy, we wouldn't be having this discussion today. I would simply reiterate what I have said before: we absolutely want to raise pensions, but we are not yet in a position to do so. That is the truth.

Now, we can begin to think differently because the economy is stronger. I also want to address salaries, as there is often concern that when salaries rise, pensioners are negatively affected. In reality, you should be the first to celebrate salary increases because higher salaries mean more contributions toward pensions. Every time someone earns a higher salary, they contribute more to social insurance. When we raise public sector salaries-like we have done by bringing the average salary for teachers to 950 euros a month-it means that each teacher contributes more to social insurance. This, in turn, ensures they will receive a better pension upon retirement. Moreover, the increased contributions enhance our social insurance fund. Therefore, the primary beneficiary of salary increases, aside from the individuals receiving the pay, is indeed the Social Insurance Fund.

Therefore, we decided that no person in the Republic of Albania, could be without a pension, and we established the social pension. People who have not worked a single day, who were housewives, who did not work, who did not pay social security, were given a social pension.

Secondly, we have allocated a substantial amount every year, around 20 million dollars, to compensate for the electricity costs of lonely pensioners and pensioners who are the heads of households, whether they are in couples or living alone, and it's not a small amount every year. This is a limited quantity of kilowatt hours that is paid directly from the state budget for pensioners; it's included in the budget every year. Now it's time that, while everyone has begun to receive their benefits from the growing economy in the form of salaries and investments, pensioners should also enter this mosaic and receive more benefits from the growing economy. That's why we are preparing and carefully calculating to increase the bonus at the end of the year.

We increased the bonus to 5,000 lekë or 50 euros for each pensioner. Now we are preparing to implement another new bonus that will be an annual bonus and, of course, will be higher than the current one.

Secondly, we are also making projections to start a gradual increase in pensions within the next term.

Thirdly, we are working on another measure that will require some time to calibrate, to link pensions directly to economic growth. We want that anything that grows beyond the forecast, and usually in most cases the growth goes beyond what we predict, for example, we forecast 3.5%, and it goes to 3.7%. We forecast 3.3%, and it goes to 3.5%. So, for every part that grows beyond the forecast, we want to link it to the pensioners. Some countries have done this and we are studying them.

Finally, I have two things that are important to me, at least more than all the others for our fourth term.

The first priority is Albania's membership in the European Union. The second is to provide as much breathing room as possible for pensioners.

EU membership and the increase of pensions are two fundamental goals for our fourth term. I have eagerly awaited this day, and it has taken a lot of patience to reach a point where we can discuss concrete steps for pensions. In the past, we didn't have this opportunity, and no international financial institution would have allowed us, as it could have exposed Albania to significant risks for both creditors and financial markets.

Today, we can look you in the eye and confidently say that this new year, you will smile more than in any previous year. A smile has no limits, but the idea of smiling more today than yesterday is an important principle.

Now, since we are in Fier and you are all here, we won't wrap things up as we did in Tirana. I would be very pleased if anyone has something to say; I'd stay here to listen to you. So, if anyone would like to take the floor, please do. And, as always, women come first in Fier actually women are first everywhere however here in Fier, their strength is recognized, and I know they are at the forefront, which is why the men in Fier achieve more success.

Thank you, Mr. Prime Minister, for coming today to meet with us, the pensioners of the Fier district. We want to remind you that your government is facing a significant deficit in social security. I fully support your initiative for inspections in all private companies. These inspections should be strict, secure, and carried out by teams that will not abuse their power. There should be zero tolerance for this.

I have a concern for those of us who retired before '94. If possible, we would appreciate a small pension increase so that we can also be included in those lists.

Beyond the pension issue, I want to extend my greetings to you and the Ministry of Infrastructure for the Durrës-Ndroq, Pezë, and Kombinat road project, as it was a long-standing problem, and I thank you for addressing it.

Prime Minister Edi Rama: I want to clarify something very important regarding the deficit you mentioned. This is not just a government deficit; it reflects a long history and a situation where we did not wait for this day to start increasing the number of contributors and revenues. Remember that since 2014, after the pension reform-which I won't go into too much detail about-we have increased the number of contributors by about 300,000. Without our ongoing efforts to increase contributors, we wouldn't be able to pay even half of the pensions we currently do.

So, what has changed with the 2014 reform? A teacher who retires after 2014 now has a higher pension than one who retired before then. Both are teachers who did the same work. At first glance, this may seem unfair, but if you look at how the system functions, it's unavoidable. As far as we are concerned, we have done what we could, and all new pensioners since 2014 receive pensions that accurately reflect their social contributions.

Secondly, we currently have a problem with former cooperative workers and employees of state enterprises before '94, who are not included in the same scheme as others. Therefore, we are preparing a draft law for about 45,000 people, and the new law will pave the way for new pensions, where I hope you will be included. We will also cover this category, which is the most affected and often overlooked.

This will be significant, regardless of the scheme. We also need to acknowledge another important factor, Life expectancy, which has increased, but this also means the number of people living here with us increases, allowing them to live as long as they wish and receive pensions.

According to our calculations, we have significant revenue potential that, if we can tap into those cash flow channels, will provide us with new opportunities in the coming year and allow us to speak with even more optimism about a sustainable increase in pensions. This is a fact.

I have a suggestion, Prime Minister, If salaries have increased, then the contribution rate of 11.2% withheld from salaries should also be reviewed. Perhaps we could raise that percentage to increase contributions. Thank you for listening, and I apologize for taking too long.

Prime Minister Edi Rama: Let me clarify something. First, we had an issue where pensioners who continued to work as self-employed were required to pay social security contributions, and we have changed that.

Now, we are also getting ready for a bonus and a broader pension reform-it is crucial for this district, and for others, but especially for this district, to address those who have been told, 'We can't help you because you retired in '93-'94.' The archives were completely nonexistent, so we had no records and didn't know how to calculate their pensions. Now, we will automatically recognize the years of work for everyone. There will be no bureaucracy or questions about where they worked or where the documents are. This automatic recognition will lead to new pensions for them.

Lastly, we shouldn't enter the New Year without informing pensioners that when their electrical bill arrives in January or February, it will be less than before.

Let's see if it happens, but the love for Fier is significant; it deserves investment.

Thank you all very much!"

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