Page 78 - Economic report 2020

Box 8.1
SYNTHESIS OF THE MEASURES PROPOSED IN THE ASSESSMENT AND POSITIONING
REPORT OF THE CASS “14 Measures for the Integral and Coherent Reform of
Pensions in Andorra” 1

1. Raise the contributions from 12% to 16% in the time of retirement. As an equivalent measure
pensions branch on the basis of 1 percentage for pensioners in the points system (closed to
point/year. newcomers), the conversion factor will go from
9.6 to 17 for 25 years from entry into force of
2. Standardise the contribution periods of all workers the reform.
(full-time equivalent).
10. Supplement low pensions with non-contributory
3. Establish minimum bases (CASS minimum wage) ones envisaged in the Law on social and social
and maximum contributions. health services, avoiding disincentives which tend
to lower contributory efforts.
4. Introduce a system of “individual accounts”
(accounting euros) to replace the system of “points 11. Increase pensions according to the CPI (established
accounts” for under-45s. in Law 2008).

5. Increase the pension age to 67 gradually over 12. When working in retirement, and the pension is
eight years, on the basis of three months per year. fully compatible with the income from work, 8%
of the wage must be contributed as a “solidarity
6. For workers who retire within the points system, contribution”. Workers with income compatibility
penalise early retirement by 7% per year; the will continue to make ordinary contributions to
76 minimum age is 63 in accordance with the the pension branch, if they wish, in exchange for a

progression in the previous proposal. periodical recalculation of the pensions.

7. For workers who retire within the points system, 13. Promote business or Pillar II plans, with an
reward delayed retirement with a benefit of 4%, obligatory capitalisation system promoted by the
from the legal retirement age until 72. business, and create a Pillar II public pensions plan
(default plan) to manage the Pension Reserve
8. Deferred period of fifteen years to have the Fund (FRJ). These plans will receive contributions
right to receive the pension. Contributions paid of 1% from the business + 1% from the employee
into the pension branch that do not fulfil the + 0.5% from the Government and will increase
deferred period of fifteen years will preferably progressively until they reach a total of 5% within
be transferred to the Public Capitalisation Plan in 5 years (2% + 2% + 1%).
Andorran economy: general developments | VIII. Public sector
Pillar II.
14. Already envisaged in the IRPF Law (Personal
9. Within the Social Security system of individual Income Tax), Article 39; apply a 30% reduction in
accounts, pensions will be calculated as a pension plans up to a maximum of the maximum
lifetime income linked to life expectancy at the contribution base of the Social Security.

1 Available at: <https://www.cass.ad/reformapensions>.