Almost two-thirds of the social protection total financial envelope are used for old age pensions, and the share is rapidly growing, following the population aging shifts in the demographic trends, as well as the out-migration of the population, the growth in informal employment and, since 2017, the more generous pension-calculation policy. Sickness and disability-related payments represent about 15 percent of the total resources allocated for social protection in the year 2016, while family and children-related ones, around 9 percent.

The social protection system in Moldova is organized in two pillars: social assistance, which includes social payments and social services, and social insurance. In 2017, the total of transfers made by the social protection system amounted to MDL 17.3 billion, or 13 percent of GDP. Social insurance accounts for around 65 percent of total resources, while social assistance – for the remaining 35 percent. Most of the payments for both social assistance and social insurance are made from or through the State Social Insurance Budget (SSIB) which is managed by the National Chamber of Social Insurance. The amount and structure of expenditures presented in the Table 4 reflects a rather complex system, with many duplicating categories of payments and with many individuals apparently benefiting from multiple benefits.

**Table 4. Expenditures for social protection,** **<u>year 2017</u>**

|**Item**|**MDL**<br>**billion**|**% of**<br>**ancestor**<br>**category**|**Number of**<br>**beneficiaries, 1**<br>**ofJanuary 2018**|**Comments**|
|---|---|---|---|---|
|SOCIAL<br>PROTECTION<br>TOTAL|17.182|100|||
|Social insurance benefits|12.242|71.3|||
|_Social insurancepensions_|_10.611_|86.7|||
|_Old age pensions_|_8.577_|80.8|532976||
|_Disability pensions_|_1.609_|15.2|128549||
|_Other pensions_|_0.427_|4.0|30671|Special pensions for prosecutors, judges, MPs, members of<br>the Government,civic aviation employees.|
|_Social insurance compensations_|1.614|13.2|394792|Work-related injuries or sicknesses, work inability, maternal<br>andpaternal leaves,unemployment benefits.|
|_Other social insurance benefits_|0.017|0.2|3737|Includes mainly payments for sanatorium treatment|
|Social assistance benefits|4.939|28.7|||
|_Social assistance pensions_|1.311|26.6|31828|Pensions to participants of liquidation of consequence of<br>the Chernobyl disaster,MPs,military, prosecutors,etc.|
|_Supplements to the social_<br>_assistancepensions_|0.001|0|Not known|Dependents of the deceased military personnel|
|_Social assistance compensations_|0.433|8.8|66215|Includes mainly family and children related benefits and<br>benefits for athletes|
|_Allocations_|0.581|11.8|130888|Support to those not meeting conditions to receive state<br>insurance pensions, supplementary social protection of<br>some categories, social benefits to population in the<br>Transnistrian region,support to those with state merits.|
|_Compensations_|0.058|1.2|2279|Mainly, compensations to participants of liquidation of<br>consequence of the Chernobyl disaster and their family.|
|_Material aid_|0.814|16.5|53000 families|Provision of the means-tested social aid, provision of aid<br>during in the cold period of the year, provision of support<br>for funerals of uninsuredpersons.|
|_Other social assistance benefits_|1.740|35.2|Around 650000<br>persons.|Closing the gap up to the minimum pension, supplementary<br>pensions to some categories of population, sanatorium<br>treatment,summer camps.|

Source: National Chamber of Social Insurance, 2017 Annual Report.

# **2.3. Social insurance**

Social insurance policy is funded from the State Social Insurance Budget (SSIB) which is managed by the National Chamber of Social Insurance. SSIB expenditures related to social insurance are financed from the contributions of insured persons and their employers’, however, the SSIB’s own revenues cover only a part of the expenditures, the rest being financed by the state budget. According to the financial plan for 2018, out of the MDL 11.1 billion to be spent for old age pensions, MDL 1.0 billion are to be covered from state budget transfers.

Social insurance in Moldova is organized as a pay-as-you-go system. Contributions are paid by both employer and employee. Until the 2018 tax reform, the employer’s contribution for mandatory social insurance was 23 percent, which as of October 1, 2018 has been brought down to 18 percent. The employees’ share is 6 percent. However, a number of sector-specific regimes apply. In the agricultural sector the employers pay contributions of 22 percent, of which 6 percent are subsidized from the state budget, the employees pay 6 percent. In the civic aviation sector, 9