Pensions and Reforming of their Scheme
Challenges faced by society

Msc. Fiqiri Baholli, Dr. Fran Brahimi
Fakulteti i Ekonomisë dhe Agrobiznesit, UBT


Every person, in its employment engagement, is paying social security contributions earning the right to receive pension benefits when retired at the age over 60-ies. Almost all the countries, including Albania have used a solidarity pension scheme often quoted “Pay-As-You-Go – PAYG”, where people are paying contributions that finance benefits of actual retired persons.
Economic development with financial crisis, unemployment and demographic trend (ageing of population) are imposing difficulties to the scheme making it as financially collapsed. Marked economy doesn’t accept activities that “produce” losses, that is why all the developed countries are supporting pension reforms.
For many reasons Albania is facing financial difficulties to the scheme, and for many years government from the budget is financing the gap between payments and contributions.
However the retired benefits are very low and the first pension is far away from the last salary. In this context, the pension reforms are the only option that “unfortunately” bears some initial costs that are postponing the process.
This article explains difficulties of existing pension system in Albania and expresses views and recommendations for pension reforms in Albania.

Keywords: contributions, pensions, pension pillar,  “Pay-As-You-Go” solidarity scheme.

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