Pension system in Albania

AuthorBora Angjele
PositionAgricultural University of Tirana
European Journal of Economics, Law and Social Sciences
IIPCCL Publishing, Graz-Austria
Vol. 1 No. 2
June, 2017
ISSN 2519-1284
Acces online at
Pension system in Albania
PhD (C.) Bora Angjele
Agricultural University of Tirana
The pension system in Albania has ful lled its basic functions during the transition and
now it su ers from some outstanding issues that render its reform indispensable. First, the
pension scheme su ers from a very high de cit that renders it nancially una ordable.
Secondly, although all elderly are covered by the scheme due to the entire employment during
a large part of the working age population currently is not insured due to high unemployment
rate but also informality. This has worsened sensibly the report between contributors and
bene ciaries. Therefore, the Albanian pension system is no longer able to balance su ciency
of bene ts with a ordability of costs. Given the importance of pensions for social protection,
it is necessary to intervene immediately to reform the system.
Keywords: pension, system, Albania.
The establishment of a comprehensive system of social insurance in Albania is evinced
in 1947. The initial social insurance system was gradually consolidated in two schemes:
one for public sector employees and another for agricultural cooperative members.
This system was, on the one hand, very generous and, on the other hand, it did not
provide complete social coverage. It predicted low retirement age and di erential
treatment for certain categories of employees. The system was nanced by
contributions from public employers and state agricultural cooperatives, which were
naturally part of the cost and the planned price. The system was fundamentally
based on generation solidarity, where the contributions collected funded the de ned
bene ts during that period, by way of which the employed individuals would obtain
future rights in the social insurance area in the meantime.
Until 1991 the number of employed individuals in the former state enterprises and
agricultural cooperatives, who constituted the contributors to the social insurance
system, was 1 million 446 thousand. The rst bene ciaries of the system are evinced in
1960. According to statistics of the time, in 1966 are evinced approximately 35 thousand
bene ciaries, mainly with partial pensions, versus 263 thousand contributors. While
at the end of 1991 the number of bene ciaries had reached 329 thousand, re ecting a
dependency rate of 4.5 contributors to 1 bene ciary.
The following table re ects the contributors and bene ciaries of the system over
some years. The number of contributors has grown year a er year and so has the
bene ciaries’ one. Initially , in the rst years , the system 's dependency ratio has
been quite favorable , which re ects even a very low rate of contribution to the
salary , while recently , in 1991 , the contributor - bene ciary ratio was 4.5 to 1 , at a

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