Health and pension contributions in Romania: what changes in 2017 ?

The collection of health and pension contributions in Romania goes through a couple of changes this year. Employees will have to get used to a slightly different calculation method of these contributions in 2017, which will also impact employers.

HEALTH AND PENSION CONTRIBUTIONS IN ROMANIA – JANUARY 2017

More precisely, as of January 2017, employees’ health (5,5 %) and pension ( 10,5 %) contributions are capped to the equivalent of 5 average gross monthly wages. This means that what is above this amount is not submitted to these contributions.

The big novelty is actually the ceiling for health contributions, introduced in the beginning of this year. The cap for pension contributions was already applied before.

As for the employer’s side, things were pretty much unchanged in January 2017. Nor the health or the pension contributions were capped, just as in previous years. The latter was calculated to the whole amount of salaries in a month and capped at 5 times the average salary, multiplied by the average number of employees registered during the month.

The average gross salary is, until the government will decide to change it, the same as the one in 2016: 2 681 RON (~596 €).

EMPLOYEE HEALTH AND PENSION CONTRIBUTIONS: BIG CHANGES STARTING FEBRUARY 2017

The situation for employee health and pension contributions changed radically starting the 1st 0f February 2017. The new government decided by Decree no.3/2017 to eliminate the cap mentioned above. Therefore, no matter the amount of their salary, employees will have to contribute for the health and pension fund  based on their whole gross salary.

The purpose of this measure is to ensure an equal treatment, regardless of the wage amount.

Obviously, the employees with higher salaries are negatively impacted, as they will get a diminished net amount. There will also be an impact on the companies paying high salaries to a large number of employees.

In the table below there is an example of this measure’s impact on different salary levels:

Gross salary Net salary 2016 Net salary January 2017 Net salary starting February 2017
3 000 € 2 106 € 2 107 € 2 104 €
3 500 € 2 501 € 2 525 € 2 455 €
5 000 € 3 685 € 3 779 € 3 507 €
10 000 € 7 633 € 7 658 € 7 014 €

If you are a Romanian employee with let’s say a salary above 3 000 €, it suffices to do a very quick computation: just multiply what exceeds 3 000 € of your salary by 0,165 and you’ll get the “ loss” in your pocket.

As for the employer, the simulation will depend of course on the structure of the total wage mass. If most salaries are below this amount of around 3 000 €, there will be a minor impact.

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