Which pensioners will receive up to 6,720 pension at the “Small Recalculation”

From January 1, 2025, pensioners in Romania will benefit from a new pension indexation, a process that brings both good news and challenges for some of them.

This “Little Recalculation” will take place for all pensioners, but not all will benefit equally from this measure. While many will see an increase in their pension, others may not receive an extra penny.

How pension indexation works

The indexation of pensions for 2025 will be calculated taking into account two variables: the inflation rate of the year 2023 and 50% of the real increase in the average gross wage earnings. Inflation in 2023 is estimated to be 10%, and the increase in average gross income adds a supplement of 2%, resulting in a total indexation of 12%.

Examples of pension increases

Here are some concrete examples of increases on January 1, 2025, based on a 12% indexation:

• Current pension: 1,281 lei
  Increase from 1 January 2025: 153 lei
  The new pension: 1.434 lei
• Current pension: 3,000 lei
  Increase from 1 January 2025: 360 lei
  The new pension: 3.360 lei
• Current pension: 6,000 lei
  Increase from 1 January 2025: 720 lei
  The new pension: 6.720 lei

Retirees on higher pensions will see bigger increases in absolute terms, which has sparked some controversy among those on lower pensions who will get a smaller increase.

Little Recalculation and the conditions to benefit from it

In addition to the annual indexation, pensioners have the chance to benefit from the so-called “Little Recalculation”, a process that takes into account certificates from former jobs and non-permanent income obtained before the year 2001. This process will continue until March 2025 and can bring additional increases if income is identified that can be added to the contribution period.

Who will not receive extra money

However, not all retirees will benefit from these increases. There is a category of people who, upon recalculation, should have received a lower pension, but remained at the initial value, because the law does not allow the pension to be reduced. These pensioners will not receive extra money if the amount they should receive on indexation is less than the reduction originally calculated.

Concrete example: A pensioner whose pension would have been reduced by 500 lei following the recalculation will remain with the same pension. If the indexation in January would bring an increase of only 300 lei, he will not receive any increase, because the indexed amount does not cover the initial difference.

Pension tax

Pensioners with pensions higher than 3,000 lei will pay a 10% tax on the difference between the pension received and this threshold. Thus, wage increases can also bring higher taxation. For example, if a person has a pension of 6,720 lei after indexation, the tax will be applied on the amount of 3,720 lei.

The indexation and small recalculation from January 1, 2025 bring both good news and challenges for pensioners in Romania. While many will see a significant increase in their pension, others may not see the increase at all. It is essential that every pensioner is informed of how these changes may affect their income and prepares for the potential financial implications, including additional pension tax.