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RESOLUTION OF AUDIT CHAMBER OF THE REPUBLIC OF MOLDOVA

of October 27, 2015 No. 39

According to the Report of audit of efficiency of the pension system of the Republic of Moldova

Audit Chamber in the presence of the Minister of Labour, Social Protection and Family Mr. Mirchi Bugi, the chairman of National cash desk of social insurance Mrs. Maria Borta, the main consultant of the permanent parliamentary commission on economy, the budget and finance Mr. Georgy Kozhokar, the head of department of social development of the State office Mr. Yury Buchinski, the director of State Labour Inspection Mr. Dumitra Stevile, the deputy chief of the Main state tax authorities Mr. Andrian Timotin, the head of department of social protection and the help of the Ministry of Internal Affairs Mr. Mihai Kapbetut, the head of department of provision of pensions of the Ministry of Defence Mr. Vasily Rebezhi, and also other officials, being guided by Art. 2 (1) and Art. 4 (1) and) the Law on Audit Chamber No. 261-XVI of 5:12. 20081, considered the Report of audit of efficiency of the pension system of the Republic of Moldova.

Having considered results of audit and having heard the submitted Report, and also explanations of the officials who were present at public meeting, the Audit Chamber established the following.

The state by means of the pension system gives financial support to persons which reached retirement age. Thus, for accumulating of necessary resources collection of the income from payment of fees of compulsory national social insurance which are aimed at providing the financial balance by provision of pensions is performed.

In recent years the pension system of the Republic of Moldova is subject to impact of number of social and economic factors, such as aging of the population, strengthening of emigration of able-bodied people, etc. owing to what the budget of the national social insurance as a result of decrease in number of taxpayers suffers. For maintenance of financial balance of this budget financial resources from the government budget were annually allocated.

At the same time for the purpose of provision of the pensions granted by power bodies from the government budget are allocated annually about 800,0 of one million lei, including to the Ministry of Internal Affairs, the Ministry of Defence, the National center for fight against corruption, Service of information and safety, Department of penal institutions and Service of the state protection.

In the context of increase in the funds allocated from the government budget for the pension system, including for covering of budget deficit of the national social insurance it is necessary to take measures for ensuring financial stability of system. Thus, it is necessary to stimulate participation in forming of the income of this budget, and also to use effective instruments of monitoring and control of collection of the income. At the same time within the auditor mission the following shortcomings and problems were revealed:

- some strategic objectives were not achieved, such as: providing worthy life, creation of non-state pension funds;

- the normative legislation requires updating, in particular procedure for measure definition for calculation of pensions, special conditions of provision of pension for some categories of citizens (retirement age, calculation base of pension, etc.);

- non-compliance with the budget discipline in case of payment of social fees and thereof cancellation/repayment of some tax liabilities of taxpayers based on legislative provisions and judgments, without their compensation (968,8 of one million lei);

- existence of the phenomenon of not declared work.

The procedure and conditions of purpose of pensions are regulated by National cash desk of social insurance numerous legislative and regulations which provisions in certain cases are not exhaustive that leaves the place for interpretations. These conditions provide possibility of any measure definition, the pensions participating in pension calculation, especially till 1.01.1999. For this period there are no automated data on implementable indicators that determines fraud risk in case of production of documents, confirming the insured income.

At the same time the internal control system of National cash desk of social insurance requires enhancement for the purpose of the description of all procedures and specific situations on competence levels, in particular selection criteria for verification of certificates of the salary that would provide transparency of this process.

For ensuring transparency of process of appointment and provision of the right of the receiver specific actions and actions in this direction from authorized bodies are necessary to get acquainted with procedure for calculation of pension and indicators which formed the basis of its determination.

Provision of pensions by the Ministry of Internal Affairs and Ministry of Defence is performed on the basis of the legislation, for lack of the staticized domestic normative situations or procedures which shall contain exhaustive list of the types of activity connected with this process. The failure to provide of check by the central industry bodies of correctness of the money requested by financial institutions for pension payment caused forming of balances in cash for accounting year.

Besides the existing normative legislation does not establish the requirements concerning systematization at the central level of data on the number of pensioners in the Republic of Moldova and the related expenses that does not allow to possess the complete information about system of provision of pensions.

Proceeding from the above, based on Art. 7 (1) and), Art. 15 (2) and (4), Art. 16 c) and Art. 34 (3) the Law on Audit Chamber No. 261-XVI of 5:12. The Audit Chamber DECIDES: 2008,

1. Approve the Report of audit of efficiency of the pension system of the Republic of Moldova attached to this resolution.

2. To direct this Resolution and the Report of audit:

2. 1) to the Ministry of Labour, Social Protection and Family for consideration, according to competences and to demand:

2.1. 1) to implement the recommendations stated in the Report of audit;

2.1. 2) to consider the possibility of consolidation/combination of legislative arrangements for all categories of pensioners with indication of criteria and conditions of provision of pension;

2.1. 3) to develop offers on change/amendment of the normative legislation for the purpose of covering of costs for provision of pension for insured persons who worked at the companies subjected to insolvency process which debts were paid off;

2.1. To develop 4) together with power bodies (The Ministry of Defence, Service of information and safety, Department of penal institutions, Service of the state protection, the Ministry of Internal Affairs, the National center for fight against corruption) of the offer:

- about amendment of the legislative regulatory base regarding the description of the concepts "length of service in civil industries, related on profile of their military specialty" and "other stimulating payments of permanent nature";

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