Finance Minister Announces Pension Indexation in 2027

The Minister of Finance, Alexandru Nazare, has stated that pensions in Romania will be indexed in 2027. According to the official, the final decision on how the increase will be applied will be taken by the Government, but only after all the necessary data has been consolidated within the dedicated IT platform.

Nazare specified that the indexation of pensions is a measure that must be put into practice next year, but stressed that both the timeline and the final decision depend on the completion of data integration into the IT system.

The Minister explained that as soon as the authorities have access to all the consolidated data, the matter will be discussed in Government, where the specific manner of applying the indexation will be determined.

"We have discussed the indexation of pensions — it is something we must do. Once we have all the data integrated into the platform, we will take the decision in Government. But there will be a pension indexation," stated Alexandru Nazare, Minister of Finance.

The statement comes in the context of ongoing discussions regarding fiscal and budgetary policy for 2027 and the measures that could affect household incomes. Pension indexation is considered one of the decisions with the greatest impact on next year's budget, owing to the effect it has on public expenditure.

Lower VAT on staple foods? What else the Minister said

In addition to the topic of pensions, Alexandru Nazare also addressed the possibility of reducing VAT on staple foods. The Minister said he would very much welcome such a measure, as it could lead to lower prices for consumers, but cautioned that the budgetary impact must be carefully analysed before any decision is made.

The official pointed out that reducing any tax or levy can have implications for budget revenues and for the fiscal commitments Romania has undertaken.

"I would very much like it, very much, if we could do this. However, we must be very careful. We must be very careful about the impact of any measure that reduces a tax or levy, and about the implications it may have, including for the absorption of PNRR funds," stated Alexandru Nazare, Minister of Finance.

As such, reducing VAT on staple foods remains, for the time being, merely an intention expressed by the Minister, rather than a measure that has been approved or confirmed for 2027.

Romania must maintain two VAT rates: 11% and 21%

One of the main obstacles to any potential VAT reduction is the commitments Romania has made in its relationship with the European Commission.

Alexandru Nazare recalled that the tax reform set out in the PNRR requires the maintenance of two VAT rates: 11% and 21%. Any changes to the taxation system must be assessed so as not to jeopardise the fulfilment of the fiscal reform milestone and, by extension, access to European funds.

The Minister drew particular attention to payment request number six under the PNRR and to component C16, noting that any fiscal change must also be analysed from the perspective of how it affects the absorption of European funds.

Under these circumstances, any potential reduction of VAT on staple foods would need to be compatible with the commitments Romania has made to the European Commission.

What is happening with pensions and taxes in 2027

The Finance Minister's statements outline two important directions for economic policy in 2027: pension indexation and the possible reduction of taxation on staple food products.

Regarding pensions, Alexandru Nazare confirmed that indexation must go ahead, with the Government set to determine the specific details once all the necessary data has been fully consolidated.

As for VAT on food, the Minister expressed a favourable intention, without however announcing a final decision. Any reduction will need to take into account budget revenues, the agreed fiscal reform, and the conditions attached to PNRR financing.

For the time being, pensioners have confirmation of the Government's intention to index pensions in 2027, whilst any potential reduction of VAT on staple foods remains contingent on a budgetary impact assessment and compliance with European commitments.