An open discussion focused on pensions within the framework of the “Albania 2030” vision was conducted today in Durrës, led by Prime Minister Rama. Pensioners from the city and its surrounding areas were invited to participate, the government is committed to sharing a vision that actively includes pensioners in the country’s economic growth.
Mayor of Durrës, Emiriana Sako, emphasized that this meeting follows a two-week consultation period with pensioners, organized by the mayor, local deputies, and leaders from the municipalities of Shijak and Krujë. They have been engaging with pensioners to address issues, challenges, and future plans pertaining to pensions.
Minister of Economy, Culture, and Innovation, Blendi Gonxhja, discussed forthcoming changes in the pension calculation process, stating: “Another significant challenge is to resolve the difficulties faced by numerous individuals. By 2025, we will establish over 40,000 new pensions, automatically recognizing all years of service prior to 1994 for both cooperatives and state enterprises. This initiative ensures that those eligible for a new pension will have their previously unrecognized years acknowledged without the need for court proceedings, complications, or any appeals.”
***
Prime Minister Edi Rama: Thank you very much for this opportunity. I am confident that you have been closely following the open discussions we initiated over ten days ago throughout Albania, aimed at engaging directly with pensioners. In today’s world, our environment is increasingly filled with noise and misinformation from various media channels, where the truth is often hard to find. It is rare to hear discussions centered on facts and issues that are genuinely essential for people, such as pensions. This is why it is crucial for us to communicate directly and transparently based on factual information.
Now, it is the right time for this discussion, because we are in a situation where the economy is not only growing but doing so in a sustainable manner. In fact, all the other categories have benefited from this economic growth, through wage increases, expanded business activities, and rising revenues. The only group that has not yet directly benefited from this economic growth are the pensioners. We have accomplished many things for you, but we have not yet fulfilled what you expect and what has been our objective since day one at the government table: a gradual and sustainable increase in pensions.
Why have we needed ten years to have this conversation? Because increasing pensions is fundamentally different from raising salaries. These two issues operate under different principles: salaries are influenced by taxes, whereas pensions are based on contributions. Additionally, prior to 2014, when we enacted our first pension reform, Albania faced a situation detrimental to its future, characterized by a pension of just 100 euros. This meant that even after 40 years of work and full contributions, one could not exceed this amount. Informal employment was also prevalent.
In 2014, we eliminated the pension ceiling, and as a result, everyone retiring since then has received a higher pension. For example, a teacher who retired in 2010 now has a lower pension than one who retired after 2014.
Today, approximately 100,000 pensioners receive pensions exceeding 300 euros due to this reform. We have successfully included around 300,000 workers in the contribution scheme, ensuring that social contributions are made by those who were previously outside the system. Consequently, the average pension has increased from 105 euros to 190 euros—almost doubling. However, this amount is still inadequate, and we recognize that many pensioners continue to receive very low pensions, which is a pressing issue we seek to address.
Furthermore, when it comes to salary increases, the first beneficiaries should be pensioners. Why is this? The answer is straightforward: with every salary increase, we generate more contributions to fund pensions. The lower the salaries, the fewer contributions we receive for social security, leading to reduced funding for pensions.
Taxes are for children; social security is for the pensioners. Taxes are what have brought us to where we are today; they fund what the mayor discussed, they build schools, they construct hospitals, and they support all types of investments and public services. Taxes sustain all the institutions that serve us. Taxes are not meant to pay pensions. The payment of pensions comes from social security contributions. However, when the contributions fall short of what we need, we might take some contributions from the taxes. We are borrowing from the future to guarantee the present for pensioners. For this reason, I want to emphasize that there is an annual shortfall of 500 million that we must fill for pensions, along with another 500 million resulting from unpaid health insurance obligations.
So, what do we aim to do? We want to address why we are having this discussion today and how we must involve you in the economic growth of the country. As the economy grows, wages increase, investments rise, and revenues expand, allowing you to benefit from this growth, despite all the discussions and challenges we face, it is crucial to understand the underlying issues and recognize that every additional cent represents a sacrifice.
We increased the bonus, providing not just a single benefit for two pensioners, but a 50-euro bonus for each pensioner in a household. We cannot simply say you will receive a 50-euro bonus and nothing more. Firstly, we are finalizing plans to increase the end-of-year bonus, which will become a permanent feature every year.
Secondly, we are implementing a gradual increase in pensions and we are enhancing our contributions while also initiating measures to boost revenues from those required to pay social security contributions from their salaries. There remains considerable potential in this area, despite the significant progress we have made. I believe we will be able to gradually increase pensions, alongside the larger end-of-year bonus I mentioned, which will be consistent each year.
Thirdly, we are working to ensure that pensioners participate in the benefits of economic growth. The government always has an economic growth projection that informs its budget planning, just as a household assesses its income to decide on purchases, such as a television or a home, the government operates similarly. Typically, when we project a 3% economic growth, it may actually turn out to be 3.1% or 3.2%, exceeding expectations. We are exploring how to implement a provision that ensures any percentage exceeding the forecast is allocated primarily for the benefit of pensioners, effectively acting as an additional bonus each year, on top of the end-of-year bonus. What will significantly help us is the strong pressure we will place on companies to declare actual wages. In Albania today, real wages are much higher than reported, and the reason for this underreporting is primarily to avoid taxes, social and health obligations.
Therefore, every employee must understand that if they agree with their employer to receive part of their salary in cash and part of it in the bank, they are digging their own grave. At the end of the day, their pension will not reflect what they actually earned but will be much smaller. In doing so, they are effectively stealing from another pensioner, because what pensioners receive today comes from the work of those currently employed, compensating for their own contributions.
There is no country in Europe, and certainly none in the Balkans, where small businesses have zero taxes, only Albania has these zero taxes. We do not get a single LEK from small businesses on their profits. What we ask of small businesses is only to pay social and health insurance contributions. So, having zero taxes and avoiding paying social and health insurance means not contributing to your own pension for the future, while at the same time taking away from a pensioner who is waiting for their pension today. This is scandalous, there is no negotiation regarding social security contributions; it is mandatory. The law does not allow any negotiation because there is nothing to negotiate about. What you pay goes directly to the pensioners currently receiving benefits, and they deserve to receive their pensions on time.
These are essentially the points I wanted to share with you, and of course, I would be happy to take any questions or hear any comments you might have.
Thank you very much. I am confident that we will bring you joy at the end of the year—a joy that is truly essential, following that, we will continue our efforts to achieve even more and better results in the years to come.
