Pension system in European Union and Albanian Integration

Abstract

Thesis topic is about "Pension Systems." Approximately 25% of the EU citizens are depended on pension income. Pension system is like give and take system, meaning when you are during your working period you make contributions and receive them when you retire. Contributions made at a specified time by working people are directly used to cover the expenses for pensions at that time. Due to low birth rates in EU average age for people is getting higher and higher affecting directly the pension system. However it is projected that public expense on pension system will remain approximately same in the incoming decades. However, Albania like other countries in transition has experienced an increase in the level of informal labor, which has yielded limited by contributions from salaries, and causing insufficiency to provide pensions for generations of elderly, most of whom recieve full pension. Albania has managed to avoid a financial crisis in the social insurance system by severely compressing benefits and by transferring funds between branches of social security. The compression of benefits has led to other problems, as individuals, choose to declare lower earnings and spend the bulk of their career employment in the informal sector. In the current model of the pension system has major shortcomings, which evolved as patches to fix previous problems.