Esmeralda Topi
Effective this month, 791,257 pensioners throughout the country will benefit indexing in the amount of a 4.1% increase in their monthly payments.
‘The main objective of this indexing is to maintain the purchasing power of pensions in light of rising prices and inflationary pressures,’ stated Minister of Economy Blendi Gonxhe while announcing the government’s decision on pension indexing.
According to data from the Social Insurance Institute, the average monthly pension in urban areas is 18,234 Lek. As a result, with the 4.1% increase, urban pensioners will receive an average boost of 748 Lek starting this month.
Source: ISSH
In rural areas, the average monthly pension is at 11,051 Lek. For this group, the indexing increase amounts to 453 Lek per month.
Furthermore, individuals with disability pensions in urban areas will receive an additional 400 Lek, while those on family pensions will see an increase of approximately 550 Lek.
Insufficient Indexing
As per Law 7703, ‘On Social Insurance in the Republic of Albania,’ pensions are adjusted annually to compensate for the effects of price fluctuations for goods and services.
The government asserts that the indexing is intended to cover the changes in the cost of the shopping basket, which mainly includes food products, for the period from August 2023 to August 2024. This data, gathered by INSTAT specifically for pensioners, shows an increase of 4.1 percent.
Source: INSTAT
Pensioners have expressed their frustration with the 4.1% increase, noting that the rising cost of living has made basic food expenses increasingly burdensome.
Economists also regard the 4.1% pension indexing as insufficient.
‘The income sources for pensioners are fixed, yet the cost of goods has been rising for at least the last three years. As their income remains unchanged, their purchasing power has diminished. Items and services that were affordable a few years ago are now a significant burden,’ argues Eduard Gjokutaj.
‘In reality, the annual increase in pensions should be at least 1,800 Lek per month to effectively compensate for the lost purchasing power of pensions over the past three years,’ he adds.
Conclusion
Based on the verification and information collected, we conclude that the statement by Minister of Economy Blendi Gonxhe regarding the indexing of pensions starting in October is true.
