ROMANIA - Romania's Constitutional Court has rejected opposition challenges to pension changes vital to the terms of an international bailout loan.
The court, which in June rejected a government plan to cut pensions, ruled that raising the retirement age to 65 for both men and women and future inflation-tied pensions were constitutional.
All that remains before the law can come into force is for President Traian Basescu to sign off the legislation.
Romania is the EU's second-poorest member and is relying on a €20bn ($27.5bn) loan led by the International Monetary Fund. Last month the IMF agreed to disburse $1.19bn from the bailout after lawmakers approved the pension legislation.
Crinu Andanut, chairman of the Romanian Pension Funds' Association (APAPR) said: "Today's decision by the Constitutional Court to OK the pension reform law comes as no surprise. This was the second-last step in the regulatory pipeline for the adoption of this law, the final step being the President's stamp of approval, which is expected shortly. This will finally enact the law starting 1st of January 2011 and will re-establish order and some financial sustainability in Romania's state pension system.
"Also, the new law creates additional space for the development of the mandatory private pension funds (Second Pillar), both politically and fiscally, and also creates additional fiscal incentives for both individuals and corporates to take up on saving for retirement via voluntary private pension funds (Third Pillar).
"Obviously, the pensions industry as well as local pension experts both warmly welcome and support the adoption of the law."
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