Romania’s mandatory defined contribution (DC) scheme, introduced in 2008, could raise the replacement rate by 20 percentage points for a median worker entering the labour market at 22 once it has matured, according to the OECD.

The OECD’s latest Economic Survey of Romania therefore said the scheme is an “essential part” of the country’s strategy to enhance long-term pension adequacy and sustainability.

Its report also praised the draft law adopted in August 2025 to strengthen the scheme's retirement income function, which caps lump-sum withdrawals at 30 per cent.

In addition, sectoral exemptions from the scheme (IT, construction, agriculture, food) were also abolished in January 2025, “broadening coverage and strengthening sustainability”.

Romania’s combined net replacement rates, combining public and private mandatory pillars, are above the OECD average, at 77 per cent for average earners (OECD average of 61 per cent).

Meanwhile, low earners have a replacement rate of 95 per cent in Romania (OECD average of 73 per cent), entering the labour market at age 22 in 2022 and retiring at the earliest possible age without penalty.

In addition, the OECD said the pension reform implemented in September 2024 to link the retirement age to life expectancy strengthens long-term fiscal sustainability by encouraging longer working lives.

The statutory retirement age for women will increase to 65 by 2035, bringing it in line with that of men and supporting higher labour force participation among older women, which is currently among the lowest in the EU, the report stated.

From 2035, the retirement age will be linked to life expectancy and based on current projections, this would raise the retirement age to 67 for an individual entering the labour market in 2022 at age 22.

The report stated: “This should help correct the fact that the average age of the first old-age pension receipt remains low in Romania, at 59.5 years as of 2023, compared to 61.3 years on average in the EU.

“With rising life expectancy, additional measures to encourage longer careers remain a priority, including through flexible work arrangements, lifelong education, workplace adaptations, and better healthcare.”

“The reform is in line with the recommendation from the previous Survey, although the recalculation of pension rights led to a one-time increase in pension costs. In particular, the reform considerably strengthened the links between benefits and contributions.

---