How Much Could the Pension Be on the Average or Minimum Wage: An Economic Analyst's Calculations

An employee with a net salary of approximately 5,680 RON could receive, after 40 years of contributions, a state pension of 2,600–2,700 RON, according to a simulation presented on Digi24 by economic analyst Adrian Negrescu. If the amount accumulated through Pillar II is added, the total retirement income could reach approximately 4,200 RON.

Negrescu stressed that the state pension will not be able to fully replace the salary earned during one's working life, even for those who have contributed for 35 or 40 years.

"Unfortunately, we will never earn as much as we would like in terms of our pension, relative to our working salary. I have done some concrete calculations. For example, on an average net salary of 5,680 RON, the pension after 40 years of contributions should be between 2,600 and 2,700 RON. On top of that, if you have been enrolled in Pillar II, you can add somewhere between 1,500 and 1,900 RON. So, in total, a pension of 4,200 RON," the economic analyst stated.

According to the simulation's notes, the figures presented are indicative estimates, not a calculation of any individual pension. The actual amount will depend on gross earnings throughout one's career, the contribution period, changes in legislation and public system indicators, as well as contributions and returns from Pillar II.

Estimated pension for those on minimum wage

For people who remain on the national minimum wage for an extended period, Negrescu estimated a pension of approximately 2,300 RON.

"If we continue to be paid at the minimum wage, the pension will be somewhere around 2,300 RON. What can you actually do with a 2,300 RON pension ten years from now? I think you won't even be able to pay your utility bills," the analyst said.

He pointed out that the nominal value of the pension does not reflect the purchasing power that sum will actually carry in ten or twenty years' time, as rising prices can erode its real value even if pensions are periodically increased.

Negrescu believes that people on low incomes should seek better-paid qualifications or, where possible, additional sources of income.

"Perhaps it is time to learn a new trade that pays better. Perhaps it is time to take on a second job, if you have the opportunity. We can no longer rely on either our employer or the state to provide for us. That is where each person's desire to work harder, to learn more, and in doing so to be better paid, must come from," the economist argued.

A call to start saving now

The analyst believes that the state pension, combined with Pillar II funds, may not be sufficient to maintain the standard of living enjoyed during one's working years. He recommends setting money aside as early as possible, even in small amounts saved on a regular basis.

"If we do not start putting money aside now for when we retire, many Romanians — especially those on the minimum wage — will end up dependent on social assistance. That is why it is important to save, regardless of the method: government bonds, ETFs, property investments, or any other instrument," Negrescu stated.