The elimination of the social security contributions cap are an opportunity for the other states where Romanians are working, for employers who send their employees to work abroad, as well as for the latter category, Stela Andrei, Senior Manager at the Tax and Legal Department of EY Romania said in an opinion piece.
One of the changes to the emergency ordinance 3/6 January 2017 and published in the Official Gazzette no. 16 from 6 January 2017 eliminates the cap on CAS (pension contribution) and repeals the provision capping the CASS (contribution to the healthcare system), which was supposed to enter force on 1 January 2017. These measures target employees with a monthly gross salary that exceeds RON 14,305 (over five average salaries).
“This controversial and already much-debated change is applicable to incomes from salaries obtained starting with February 2017. Many employees and employers already assessed the budget impact of these modifications, and, from the information that we have, the results do not look promising,” Andrei argued.
However, Romanians who work abroad could see benefits from the move. Typically, those who go abroad to work for a period of less than five years continue to pay their contribution to the public healthcare system. The European regulation as well as insurance agreements allows for this, despite the fact that, as a rule, employees must contribute towards the social security system of the country they work in.
According to Andrei, at 26.2 percent of the gross monthly salary, Romania has the highest level of social security contributions to a public pensions system. Figures show that, by comparison, the levels are lower in Germany (18.7 percent), Austria (22.8 percent) and Poland (19.52 percent). However, she argues that the pension they are set to receive is by far lower than the one they would receive in another state.
Andrei concludes that employers should consider conducting surveys to assess whether the costs justify the decision of keeping their employees enrolled in the Romanian social security system. According to her, by paying their social security contributions in the state where they are employed could prove to be to the advantage of both employers, who can optimize costs, as well as for the employees, who can access more services and benefits.